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Revenue
₹5,611 Cr
verified against source
Revenue YoY
10.9%
reported change
EBITDA
₹988.76 Cr
latest reported figure
Source
screener in
record provenance
Actual signal trajectory
Where this quarter sits.
Quarter read
What the record says.
Varun Beverages reported a solid Q1 CY24 with consolidated revenue of INR 4,317 crore (+10.9% YoY) and EBITDA of INR 989 crore (+23.9% YoY), driven by volume growth of 7.2% and improved product mix. Gross margins expanded 385 bps to 56.3% due to lower PET prices, lightweighting, and reduced sugar content. EBITDA margin improved 240 bps to 22.9% despite higher fixed costs from new plants and the BevCo acquisition. Management highlighted strong summer demand, with April plant utilization near 100%, and expects a strong June quarter aided by heatwaves, elections, and a low base. Key growth engines include the BevCo acquisition in South Africa, a new DRC plant starting next quarter, and a Cheetos snacks agreement in Morocco. Risks include potential competitive intensity and execution challenges in integrating new territories.
Colored figures show movement against the previous available record.
Guidance to track
- The greenfield plant in DRC is expected to start commercial production in the next quarter (Q2 CY24).
- Varun Beverages Morocco will start manufacturing, marketing, and packaging Cheetos in Morocco by May 2025.
- Management expects to amortize the majority of incremental debt taken for BevCo acquisition and CapEx in the next couple of months.
- Despite gross margin expansion, management maintains the same long-term margin guidance, citing one-off factors.
Risks flagged
- BevCo acquisition is recent; management needs time to improve operations and grow PepsiCo's market share from 2.2%.
- Analyst asked about Campa Cola's impact; management downplayed it, but it remains a potential threat in India.
- Finance costs increased 49.7% due to higher debt for acquisitions and CapEx; average borrowing cost rose from 7.7% to 8%.
- New greenfield plants and DRC entry require smooth ramp-up; any delays could impact volume growth.
Key quotes
- We have additionally fueled three growth engines, which will gradually and consistently contribute to revenue and profitability growth in the company.
- Our effort is to amortize the money which we have borrowed. The CapEx is done. Now we are going to the next phase.
- South Africa is a huge market. Per capita is one of the highest, anything between 170-180 or 200, and matured... PepsiCo is very, very meager. If you see in the industry, the share of Pepsi is as low as 1.8%.
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