Varun Beverages (VBL) Q4 2021 earnings summary

Executive summary

• CY21 delivered 36.8% net revenue growth and 37.7% EBITDA growth; demand recovered quickly in H2 after COVID-19 restrictions disrupted the peak season.

• First-ever Q4 profit was attributed to improved efficiencies, cost rationalization, lower financing costs and international volume recovery.

Financial highlights

• Consolidated net revenue rose 36.8% to ₹88,232.3 million; revenue from operations was ₹89,582.9 million, up 36.6% YoY.

• EBITDA increased 37.7% to ₹16,546.5 million; EBITDA margin expanded 12 bps to 18.8%.

• PAT rose 108.8% to ₹7,460.5 million from ₹3,572.7 million; basic and diluted EPS were ₹16.03 versus ₹7.60.

• Finance costs fell 34.3% to ₹1,847.0 million; gross margin was 54.3%, pressured by higher PET prices.

Outlook and guidance

• CY22 demand momentum was expected to strengthen with economic activity and consumption recovery; the third COVID-19 wave had no significant business impact at the time.

• Growth priorities include deeper distribution in underpenetrated regions, market-share gains, operating leverage, product innovation and balance-sheet strengthening through debt repayment.

• New Bihar beverage capacity and Jammu & Kashmir preform and closure capacity are intended to improve reach, backward integration and long-term growth.