VBL sees profit booking after Q2CY24 results meet estimates; stock down 6%

VBL in focus: Shares of Varun Beverages Limited (VBL) fell as much as 6.40 per cent to hit an intraday low of Rs 1,575.95 per share. 

The fall in the stock price came after investors jumped to book profit after stellar numbers in the second quarter and half year ended June 30, 2024 (H1CY24), which met street estimates.

The company’s profit rose 26 per cent year-on-year (Y-o-Y) to Rs 1,252.6 crore in Q2CY24, as opposed to Rs 994 crore in the same quarter last year (Q2CY23).

Varun Beverages’ revenue jumped 28.3 per cent year-on-year to Rs 7,197 crore in the second quarter of calendar year 2024, as against Rs 5,611 crore in the second quarter of CY23.

The company’s consolidated sales volume grew 28.1 per cent to 401.6 million cases in Q2CY24 from 313.5 million cases in Q2CY23. This includes approximately 28 million cases from BevCo during the quarter.

Ravi Jaipuria, chairman of Varun Beverages Limited said, “We are pleased to report robust performance for the second quarter of CY2024, achieving a consolidated sales volume growth of 28.1 per cent, which includes volumes from BevCo. The impressive volume growth of 22.9 per cent in India primarily contributed to this outstanding performance, supported by our expanded capacities, enhanced distribution network, and a strong summer season. Meanwhile, our international markets remained relatively flat, moreover it was a seasonally weak quarter for the African market.”

At the operating level, earnings before interest, tax, depreciation and amortisation (Ebitda) climbed 31.8 per cent to Rs 1,991 crore in Q2CY24, from Rs 1,511 crore in Q2CY23.

Consequently, Ebitda margin rose 70 basis points (bps) to 27.7 per cent in the quarter under review, as opposed to 27 per cent in the same quarter last calendar year.

The company has declared an interim dividend of Rs. 1.25 per share. Additionally, the Board has considered and recommended the subdivision/split of existing equity shares of the Company from 1 equity share with a face value of Rs. 5 each fully paid-up into such number of equity shares having face value of Rs 2 each fully paid-up. This is subject to the approval of equity shareholders of the Company. This is intended for wider retail participation, Varun Beverages said.

On the outlook, Jaipuri added, “With strong performance in a key quarter, we are on track to deliver healthy double-digit growth in this calendar year. India remains a high-demand market with massive growth potential, driven by a growing consuming class and a young population. To capitalise on this demand, we are focused on further strengthening our infrastructure, distribution network, and product portfolio. With a focus on strategic growth and leveraging new opportunities in both India and international markets, we are confident in our ability to deliver sustainable value to all stakeholders.” 

Varun Beverages Limited is a key player in the 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 sold under trademarks owned by PepsiCo. 

PepsiCo CSD brands produced and sold by VBL include Pepsi, Pepsi Black, Mountain Dew, Sting, Seven-Up, Mirinda, Seven-Up Nimbooz Masala Soda and Evervess. PepsiCo NCB brands produced and sold by the company include Slice, Tropicana Juices (100 per cent and Delight), Seven-Up Nimbooz, Gatorade as well as packaged drinking water under the brand Aquafina.

At 12:41 PM, shares of VBL were trading 4.15 per cent lower at Rs 1,613.85 per share. In comparison, BSE Sensex was trading 0.46 per cent higher at 81,726.43 levels.