Varun Beverages Ltd., one of the largest bottling partners for PepsiCo globally, has reported an impressive financial performance for the first quarter of calendar year 2025. On Wednesday, April 30, the company announced its consolidated earnings, highlighting strong domestic growth that helped offset some softness in international markets.

30% Surge in Sales Volume

One of the key highlights of Varun Beverages' Q1 report was the 30.1% year-on-year increase in consolidated sales volume, which reached 312.4 million cases. This growth was driven largely by two main factors:

• Organic growth of 15.5% in the Indian market, which remains the core revenue generator for the company.

• Inorganic volume contributions from recent acquisitions and expansions in South Africa and the Democratic Republic of Congo.

This performance showcases the company’s ability to grow both organically through strong domestic demand and inorganically via global market penetration.

Revenue and Profit Growth Strong Despite Margin Pressure

Varun Beverages posted a net profit of ₹726.2 crore, marking a 34% increase compared to the same quarter last year. This came alongside a 29% rise in revenue, which stood at ₹5,567 crore for the quarter.

This growth reflects the company’s continued success in scaling operations and tapping into growing demand for beverages across regions.

EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) rose by 27.8% year-on-year to ₹1,264 crore, underlining operational efficiency, although margins narrowed by 20 basis points to 22.7%, pointing to slight margin pressure due to global market dynamics.

Mixed Trends in Realisations

While volume growth was impressive, the realisation trends painted a mixed picture:

• In India, the net realisation per case increased by 1.8%, supported by a shift in product mix and improved pricing strategies.

• In the international markets, excluding South Africa, realisations were largely flat.

• However, on a consolidated basis, net realisation declined 0.9% year-on-year. This dip was attributed to lower realisation from own brands in the South African market, a result of price competition and changing consumer preferences.

Despite this, the overall topline growth remained resilient, helped significantly by volume expansion.

Stock Reaction and Market Sentiment

Following the announcement of the results, Varun Beverages’ stock experienced a brief decline of 3%, reflecting initial investor caution. However, it recovered to close 1.2% lower at ₹523.

It is important to note that the stock is currently 23% below its 52-week high of ₹681, suggesting a degree of underperformance in recent months. Market analysts attribute this to broader market corrections and margin concerns despite strong topline growth.

PepsiCo Partnership Continues to Drive Expansion

Varun Beverages has long been a critical partner for PepsiCo’s operations, especially in the Indian subcontinent. As one of PepsiCo’s largest bottling and distribution partners globally, the company has continuously expanded its product portfolio, improved distribution, and invested in capacity.

Its expansion into new African markets, including South Africa and DRC, represents a strategic move to diversify revenue streams and reduce overdependence on the Indian market.

With India contributing a major share of growth, the strategy to consolidate international presence is expected to balance regional revenue streams in the medium term.

Financial Summary

Outlook: Strong Growth Path with Cautious Watch on Margins

Analysts remain positive on the company's growth trajectory, especially given the expected uptick in summer demand and expansion in newer geographies. However, some caution is warranted around margin compression, especially in overseas markets like South Africa where local brands and inflationary pressure could weigh on realisations.

The company’s ability to pass on cost increases, optimise its product mix, and drive premiumisation will be crucial for maintaining profitability.

Conclusion

Varun Beverages’ Q1 2025 performance shows a robust revenue and profit growth, supported by healthy volume growth in India and strategic expansion into international markets. While margin contraction and stock volatility may raise concerns, the long-term outlook remains strong, particularly with India’s consumption boom and increasing brand loyalty in the beverages sector.

Investors will be closely watching the upcoming quarters, particularly how Varun Beverages navigates global pricing dynamics, leverages its PepsiCo partnership, and delivers shareholder value amid a competitive landscape.

The Upcoming IPOs in this week and coming weeks are  Wagons Learning, Srigee DLM, Manoj Jewellers.

The Current active IPO are Kenrik Industries,Arunaya Organics, Ather Energy, Iware Supplychain Services.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.