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🥤 Varun Beverages Q1 2025 Conference Call Summary: Robust Growth & Global Execution on Track

Varun Beverages Limited (VBL), PepsiCo’s leading bottling partner in India and several international markets, began the year on a high note with strong growth across revenue, volumes, and profitability in Q1 2025. Following the unaudited financial results for the quarter ended March 31, the management conducted a conference call with analysts and investors on April 30, 2025, sharing key performance insights and forward-looking strategies.

Here’s an investor-friendly breakdown of the highlights.

📊 Financial Overview: Q1 2025 Highlights

IndicatorValue (₹ in Million)YoY Change
Revenue (Excl. GST & Excise)₹55,669.4+28.9%
Sales Volume312.4 Million Cases+30.1%
EBITDA₹12,639.6+27.8%
PAT₹7,313.6+33.5%
India EBITDA Margin~25%↑ 111 bps
Interim Dividend₹0.50 per Share25% of FV

🌍 Operational Insights by Geography

🇮🇳 India

  • VBL recorded 15.5% organic growth in India.

  • The per-case realization improved by 1.8%, supported by product mix and operational scale.

  • CSDs (carbonated drinks) formed the bulk of sales (75%), followed by packaged water (18%) and non-carbonated drinks (7%).

  • Low- and no-sugar products now contribute nearly 59% of total volumes, aligning with the evolving demand for healthier beverages.

  • Newly operational plants in Kangra (HP) and Prayagraj (UP) began production, with Bihar and Meghalaya facilities scheduled to go live in May 2025.

🌐 International Markets

  • South Africa:

    • Reported 13% growth in volume over the last 12 months.

    • Profitability improved, with margins rising to 14.4%, from ~10%.

    • PepsiCo product sales increased to 20% of the portfolio (from 15%).

  • DRC (Democratic Republic of Congo):

    • Operations are at an early stage; expected to scale in the coming quarters.

  • Zimbabwe & Zambia:

    • Began snack distribution operations.

    • Recovery expected from the prior year’s sugar tax impact.

🧃 New Product Developments

  • ⚡ Sting Gold, a malt-based energy drink, launched in March 2025.

  • 🥤 Expansion of Rs. 20 upsized packs in multiple regions.

  • 🧪 A new jeera-flavored beverage is under pilot for future launch.

High-growth categories like hydration (Nimbooz) and value-added dairy continue to see exceptional growth rates, with ~100% and ~80% year-over-year increases respectively.

🏗️ Capacity Building & Investments

  • FY2025 CapEx budget: ₹3,100 Cr, with ₹900 Cr pending as of Q1.

  • Focus areas include:

    • Backward integration

    • Manufacturing capacity enhancement

    • Cold-chain infrastructure via additional visi-coolers

🏁 Competitive Landscape & Strategy

India’s beverage sector remains ripe for growth, with penetration still below global averages. VBL management noted:

  • Presence in only 4 million outlets out of a potential 12 million, suggesting massive room for expansion.

  • While Coca-Cola and Campa Cola (Reliance) have increased ad spends, VBL remains focused on go-to-market strength through higher reach, cooler installations, and outlet engagement.

"We prefer long-term brand building and retail activation over short-term ad bursts," shared the management during the call.

📣 Commentary from Management

Ravi Jaipuria, Chairman:
“We’re optimistic about achieving double-digit growth in 2025, supported by strong volumes and geographical expansion. Competitive intensity will only help grow the overall market.”

Raj Gandhi, President:
“Our EBITDA performance in India has been excellent. South Africa is also improving, and backward integration is helping us manage costs better.”

📊 Analyst View: Long-Term Growth Story Intact

✅ Positives:

  • Strong India-led growth with margin resilience

  • Better profitability in South Africa despite initial challenges

  • Solid execution on plant launches and distribution

  • CRISIL credit rating upgraded to AAA (Stable)

⚠️ Risks:

  • Lower per-case realizations in some international markets

  • Uncertainty in territories like Ghana and Tanzania due to regulatory delays

  • Rising competition from regional and national players

📌 Final Word: Buy on Dips – Growth Still Intact 🔍

With powerful distribution, increasing rural reach, product innovation, and strong financial fundamentals, Varun Beverages is well-positioned to ride India’s consumption wave and expand its global beverage footprint.


📢Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please do your own research before making any financial decisions

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