Why is VBL down 5% despite Q3 PAT jumps on double-digit volume growth?

Varun Beverages share price today: Shares of Varun Beverages Ltd (VBL), PepsiCo's largest franchise bottler, fell 5 per cent in trade on Friday after the company announced its September quarter earnings for calendar year 2026 (Q3CY26), reporting a nearly 14 per cent rise in net profit on the back of strong volume growth.

 

The stock traded in a narrow range before hitting an intraday low of ₹393.80 on the NSE shortly after the results were announced.

 

As of 2:30 PM, the stock was trading 4 per cent lower at ₹398.60. In comparison, the benchmark Nifty 50 was up 103 points, or 0.45 per cent, at 23,040.

 

 

Varun Beverages Q3 results Varun Beverages reported a 13.54 per cent on-year increase in consolidated net profit to ₹830.6 crore for Q3CY2026, driven by double-digit volume growth in India and international markets. VBL had posted a net profit of ₹731.51 crore in the July-September quarter a year ago.

 

Its revenue from operations was up 33.3 per cent to ₹6,815.58 crore in the September quarter of 2026. It stood at ₹5,112.43 crore in the corresponding quarter of the last year.

 

Consolidated sales volume grew by 28.7 per cent to 354.4 million cases in Q3 CY2026 from 275.3 million cases in Q3 CY2025, driven by robust volume growth of 22.5 per cent in India and 39.9 per cent in international territories.

 

Ebitda surged by 25.1 per cent Y-o-Y to ₹142.67 crore in the reporting three-month period, compared with ₹114.04 crore in the same period of the last year, to a regulatory filing from Varun Beverages showed.

 

Ebitda margin contracts Ebitda margin moderated by 140 bps Y-o-Y to 21.6 per cent in Q3 CY2026, primarily due to gross margin contraction, partially offset by operating leverage from robust volume growth in India and international territories.

 

Gross margin declined by 334 bps to 53.1 per cent in Q3 of CY2026, primarily due to higher packaging material costs, including preforms, shrink films, closures, and cans, driven by geopolitical disruptions.

 

Margins were also impacted by higher sale of non-beverage products like preforms, caps, etc. in India, which increased by 104 per cent during the quarter and has a higher COGS, impacting gross margins by about 100bps in India.

 

The company said that increase in sugar prices by about 16 per cent were largely offset by an increase in mix of low sugar/no sugar products growing from 44 per cent in Q3 CY2025 to 88 per cent in Q3 CY2026 in India. 

 

For the first nine months of CY2026 (9MCY2026), VBL said that its PAT came in higher by 15.5 per cent to ₹3,202.3 crore, compared with ₹2,772.12 crore reported in in 9M of CY2025. Revenue from operations grew 23.3 per cent Y-o-Y to ₹21,814.55 crore in 9M CY2026 as compared to ₹17,689.12 crore in 9M CY2025. 

Thomas V Abraham, research analyst, Mirae Asset Sharekhan, said that the headline growth was helped by the Twizza acquisition. Margins were hurt mainly by higher packaging costs and increased share of low-margin non-beverage sales.

 "Despite the strong topline, the stock trended lower because Ebitda margin contracted, the second straight quarter of compression. PAT grew only 13.5 per cent, against 25 per cent Ebitda growth. At these premium valuations, the market pays for margins," the analyst said.   Varun Beverages interim dividend  Meanwhile, the board of Varun Beverages has approved the payment of third interim dividend of ₹0.50 per equity share on the total issued, subscribed and paid-up 338,24,94,644 equity shares of the nominal value of ₹2 each. The dividend will be paid on and from November 7, 2026 to those shareholders whose name appears in the Register of Members of the Company or in the list of beneficial owners maintained by the Depositories as on November 5, 2026.

 

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