Varun Beverages narrows loss to Rs 7 cr in December quarter; shares skid 4%

Shares of Varun Beverages skid 4.6 per cent in the intra-day session and hit a low of Rs 899.6 apiece on the BSE on Tuesday amid profit-booking by investors on the company's improved performance in the December quarter.

The company narrowed its loss in Q4CY21 to Rs 7.2 crore compared with a loss of Rs 54 crore in the previous year period. It's revenue increased 9 per cent on year to Rs 1,351.3 crore as against Rs 1,239.5 crore YoY. It's total sales volumes (organic) went up by 5.6 per cent YoY at 87.1 million in Q42020.

Furthermore, Ebitda increased by 48.8 per cent to Rs 172.23 crore from Rs 115.74 crore reported in Q4CY20. Ebitda margins, too, improved by 346 bps in Q42020 on account of sustainable cost-optimization measures, the company said in a statement. Gross margins improved by 472 bps primarily due to favorable PET chips prices (~12.5 per cent decline) and higher mix of CSD, it added.

"We have ended the year 2020 on a steady note despite unprecedented macro-economic challenges... On the profitability front, we were able to largely sustain some of the cost-optimization measures implemented during the pandemic that enabled us to report steady profitability in Q3 and Q4. It is also encouraging that even in seasonally soft quarter, the losses in Q4 2020 were significantly lower in comparison to Q4 2019 on account of better business efficiencies, cost rationalization strategies and healthy recovery in international territories," said Ravi Jaipuria, Chairman of Varun Beverages.

"During 4QCY20, Varun Beverages Ltd's (VBL) sales grew by 9 per cent YoY to Rs 1,331crore led by healthy 6 per cent YoY increase in volume and balance from improvement in realisation. EBITDA stood at Rs172 crore, while EBITDA margins improved by 346 bps in 4QCY20 on account of sustainable cost-optimization measures.On the bottom-line front, losses reduced significantly to Rs 7 crore from Rs 54 crore in 4QCY19. Overall 4QCY20, results are above expectation. Hence, we are positive on stock," said Amarjeet Maurya - AVP - Mid Caps at Angel Broking.

Varun Beverages is a key player in beverage industry and one of the largest franchisee of PepsiCo in the world (outside USA). The Company produces and distributes a wide range of carbonated soft drinks (CSDs), as well as a large selection of non-carbonated beverages (NCBs), including packaged drinking water.

At 12:50 pm, the stock was trading over 4 per cent down at Rs 902 on the BSE, as against a 0.05 per cent dip in the S&P BSE Sensex.