Varun Beverages' Gains Hinge on Growth Recovery

Brokerages expect the firm to sustain strong momentum over medium-to-long term

- RAM PRASAD SAHU

Even as June quarter volumes and sales performance of Varun Beverages Ltd (VBL) disappointed the Street, higher margins helped boost the bottom line.

Net profit of the beverage major was up 5 percent year-on-year (Y-o-Y) though sales slipped 2 percent and operating profit was flat.

Brokerages are positive on the outlook and expect mid-teens earnings growth over the FY24-26 period. The stock of the carbonated soft drinks company is up 9 percent over the past month. Consolidated revenue and volume of the company saw a 2-3 percent fall over the year-ago quarter due to unseasonal rains in India.

The unfavorable weather led to India revenues dropping by 9 percent while volumes in the domestic market slid by 7 percent.

What helped support the overall show was the international business, which posted a strong volume uptick of 15 percent and accounted for about a fifth of consolidated revenues in the quarter.