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India volume growth deceleration due to weather Alive 1, weakening 4, dead 0.
View Bear Cases →Varun Beverages Ltd — Q3 FY24
Varun Beverages reported a strong Q3 CY2024 with consolidated revenue growth of 24.1% YoY to INR 4,804.6 crore, driven by expanded distribution and product penetration.
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Varun Beverages reported a strong Q3 CY2024 with consolidated revenue growth of 24.1% YoY to INR 4,804.6 crore, driven by expanded distribution and product penetration. EBITDA grew 30.5% to INR 1,151.1 crore, with margins expanding 117 bps to 24.0% due to operational efficiencies and backward integration. PAT rose 22.3% to INR 628.8 crore. India volume growth was muted at 5.7% due to excessive rainfall, but management expects a recovery as rains subside. International markets grew 7.9%, with DRC's new facility already sold out and South Africa showing improving trends (20% growth in September). The board approved a INR 7,500 crore QIP for debt reduction, expansion, and potential acquisitions. Risks include sustained competitive pressure from Campa Cola and raw material cost volatility.
वरुण बेवरेजेस ने जुलाई-सितंबर 2024 की तिमाही में मजबूत कमाई दिखाई। कंपनी की कुल कमाई पिछले साल की तुलना में 24.1% बढ़कर 4,804.6 करोड़ रुपये हो गई, जिसकी वजह ज्यादा दुकानों तक पहुंच और उत्पादों की बिक्री बढ़ना है। कंपनी का मुनाफा (EBITDA) 30.5% बढ़कर 1,151.1 करोड़ रुपये रहा, और मुनाफे की दर (मार्जिन) 1.17% बढ़कर 24% हो गई, क्योंकि कंपनी ने खर्च कम किया और खुद चीजें बनाने लगी। शुद्ध मुनाफा (PAT) 22.3% बढ़कर 628.8 करोड़ रुपये हुआ। भारत में बिक्री सिर्फ 5.7% बढ़ी, क्योंकि ज्यादा बारिश हुई, लेकिन उम्मीद है कि बारिश कम होने पर बिक्री फिर बढ़ेगी। अंतरराष्ट्रीय बाजार में 7.9% बढ़ोतरी हुई। कंपनी ने कर्ज घटाने और विस्तार के लिए 7,500 करोड़ रुपये जुटाने की मंजूरी दी। जोखिमों में कैंपा कोला से मुकाबला और कच्चे माल की कीमतों में उतार-चढ़ाव शामिल है।
Bear Cases1 alive · 0 deadPromises0 met · 1 missedRisks4 trackedTranscriptfull text
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Risk Intelligence
Competitive pressure from Campa Cola
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Transcript
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Read Transcript →Quarter Snapshot
Consolidated sales volume
261.5M cases
+21.9% YoY
Includes ~34M cases from South Africa and DRC. India volume grew 5.7% due to heavy rains.
India non-carbonated beverage growth (9M)
23.9%
+23.9% YoY
Non-carbonated portfolio including juice, dairy, and sports drinks grew strongly in India.
DRC facility utilization
100%
N/A (new plant)
Greenfield plant in DRC ramped to full capacity on three shifts within weeks; sold out.
South Africa September growth
20%
+20% YoY
Pepsi brand grew 20% in September, indicating improving go-to-market and backend corrections.
What Changed vs Last Quarter
NEW
DRC capacity to more than double by next year
Current DRC capacity of ~35M cases will be more than doubled with expansion at existing plant and a new facility, expected to commission in early 2025 and mid-2025.
NEW
Three snack plants in Africa to commence operations next year
Snack plants in Zimbabwe, Zambia, and Morocco are expected to start commercial production in 2025, with potential revenue of ~$100M at full capacity.
NEW
rPET plant to be operational by Q2 2025
First rPET plant under construction will produce enough preforms to meet government mandate of 30% rPET usage.
NEW
QIP of INR 7,500 crore for debt reduction and acquisitions
Funds will be used to reduce net debt (~INR 6,000 crore), support expansion, and create a war chest for strategic acquisitions.
DROPPED
Double-digit volume growth in H2 CY2024
Management expects continued double-digit volume growth in India and consolidated for the second half of the calendar year.
DROPPED
CapEx of ₹3,600 crore for CY2024
Net capitalization CapEx for 2024 remains at ₹3,600 crore, primarily for greenfield and brownfield expansions.
DROPPED
CapEx of ₹2,500-2,600 crore for CY2025 season
Planned capitalization of ₹2,500-2,600 crore for the 2025 season, mainly for greenfield facilities in India and snack food manufacturing in Africa.
DROPPED
Snack food revenue target of ~$100M in 2-3 years
Management expects snack food business in Zimbabwe, Zambia, and Morocco to generate close to $100 million in revenue within the next couple of years.
NEW RISK
Competitive pressure from Campa Cola
Campa Cola's entry with aggressive trade margins could impact market share, though management believes there is room for all players.
NEW RISK
Rainfall impact on India volumes
Excessive and uneven rainfall in Q3 led to a sharp deceleration in India volume growth to 5.7%, with rural areas most affected.
NEW RISK
Raw material cost volatility
Gross margins in India dipped ~120 bps due to higher PET prices and water cost reclassification; future input cost spikes remain a risk.
NEW RISK
Execution risk in Africa expansion
Rapid capacity expansion in DRC and South Africa, along with new snack plants, may face operational or demand challenges.
RISK GONE
BevCo integration and margin drag
BevCo's lower realization per case and higher working capital days are dragging consolidated margins; turnaround may take several quarters.
RISK GONE
Weather and seasonality impact in India
Excessive rains or harsh winters could dampen out-of-home consumption and pressure volume growth in H2.
RISK GONE
Currency and political risk in Africa
Currency volatility (e.g., Zimbabwe) and political instability in African markets could impact profitability, though management has managed well historically.
RISK GONE
Regulatory compliance for recycled PET
Mandatory 30% recycled PET content from April 2025 may increase costs if the JV plant is delayed or capacity is insufficient.
Fast read
Guidance and risk preview
Current DRC capacity of ~35M cases will be more than doubled with expansion at existing plant and a new facility, expected to commission in early 2...
Campa Cola's entry with aggressive trade margins could impact market share, though management believes there is room for all players.
View Risks →