Varun Beverages, Pepsi India’s bottler, posted a healthy third quarter on Tuesday with profits above expectations. The company’s net profit rose nearly 24% to ₹620 crore or $73.8 million. Data from LSEG showed that profit was nearly ₹44 crore more than the estimated ₹576 crore.
Varun Beverages posted considerable gains despite facing a tough domestic market owing to the unusually high monsoon rains, which analysts claimed harmed out-of-home beverage consumption. During the quarter ended September 30, the company witnessed a volume growth of 5.7 percent in India, sharply down from the double-digit growth a year ago.
However, the international business of the company turned out to be a savior as it wiped out the domestic challenges. In absolute terms, Varun Beverages reported a nearly 22 percent increase in overall sales volume, with the quarter witnessing a sale of 267.5 million cases. Chairman Ravi Jaipuria said, “Our global operations, primarily in Africa, are well-placed to drive further growth as we capitalise on emerging demand trends and enhance our operational capabilities.”
The company’s revenue from operations increased by 25 percent to almost ₹5,000 crore with contributions from BevCo, a South Africa-based company acquired in the first half of the year. Not only has the acquisition expanded the market reach of the company, but it has also contributed quite bountiful growth to its revenue.
Even though Varun Beverages saw a rise of 26.4 percent in the cost of raw materials, most of it attributed to sugar, flavorings, glass bottles, and packaging costs, its performance too has stood good. Indeed, the shares of the company moved up by 1.5 percent on declaring its result, which reiterates that this remains one of the best performers in the broader Nifty FMCG index, which dipped by 0.3 percent.
This augurs well for Varun Beverages to go on growing along with home resiliency and an increase in international demand. Gaining the possibility of navigating challenges in emerging markets bodes well for positioning in the long term and has Varun Beverages as one of the key players in the beverage industry.
