Capitaline

Results 06-Feb-23

Analysis

Varun Beverages

Sales volume grew by 40.9% YoY in CY2022

For the quarter ending Dec 2022, consolidated Net sales (including other operating income) of Varun Beverages has increased 27.67% to Rs 2214.24 crore compared to quarter ended Dec 2021. Operating profit margin has jumped from 11.97% to 13.89%, leading to 48.14% rise in operating profit to Rs 307.50 crore. Raw material cost as a % of total sales (net of stock adjustments) increased from 44.30% to 47.96%. Purchase of finished goods cost fell from 2.37% to 1.71%. Employee cost decreased from 14.43% to 12.92%. Other expenses fell from 27.38% to 24.99%.

Other income rose 988.24% to Rs 9.25 crore. PBIDT rose 51.98% to Rs 316.75 crore. Provision for interest rose 27.33% to Rs 47.48 crore. Loan funds rose to Rs 3,883.81 crore as of 31 December 2022 from Rs 3,386.76 crore as of 31 December 2021. Inventories rose to Rs 1,993.89 crore as of 31 December 2022 from Rs 1,448.09 crore as of 31 December 2021. Sundry debtors were higher at Rs 299.34 crore as of 31 December 2022 compared to Rs 221.25 crore as of 31 December 2021. Cash and bank balance declined from Rs 336.62 crore as of 31 December 2021 to Rs 285.27 crore as of 31 December 2022.

PBDT rose 57.35% to Rs 269.27 crore. Provision for depreciation rose 38.98% to Rs 179.66 crore. Fixed assets increased to Rs 7,514.62 crore as of 31 December 2022 from Rs 6,783.15 crore as of 31 December 2021. Intangible assets stood at Rs 24.23 crore.

Profit before tax grew 114.07% to Rs 89.61 crore. Share of profit/loss were nil in both the periods. Provision for tax was expense of Rs 8.08 crore, compared to Rs 9.27 crore. Effective tax rate was 9.02% compared to 22.15%.

Minority interest decreased 57.95% to Rs 6.77 crore. Net profit attributable to owners of the company increased 353.31% to Rs 74.75 crore.

Equity capital increased from Rs 433.03 crore as of 31 December 2021 to Rs 649.55 crore as of 31 December 2022. Per share face Value remained same at Rs 10.00.

Promoters’ stake was 63.90% as of 31 December 2022 ,compared to 64.89% as of 31 December 2021 . Promoters pledged stake was 0.04% as of 31 December 2022 ,compared to 0.04% as of 31 December 2021 .

Full year results analysis.

Net sales (including other operating income) of Varun Beverages has increased 49.30% to Rs 13173.14 crore. Operating profit margin has jumped from 18.75% to 21.17%, leading to 68.50% rise in operating profit to Rs 2,788.10 crore. Raw material cost as a % of total sales (net of stock adjustments) increased from 44.48% to 47.47%. Purchase of finished goods cost fell from 1.85% to 1.39%. Employee cost decreased from 11.29% to 9.00%. Other expenses fell from 23.83% to 21.51%.

Other income fell 42.81% to Rs 38.85 crore. PBIDT rose 64.11% to Rs 2826.95 crore. Provision for interest rose 0.77% to Rs 186.12 crore. Loan funds rose to Rs 3,883.81 crore as of 31 December 2022 from Rs 3,386.76 crore as of 31 December 2021. Inventories rose to Rs 1,993.89 crore as of 31 December 2022 from Rs 1,448.09 crore as of 31 December 2021. Sundry debtors were higher at Rs 299.34 crore as of 31 December 2022 compared to Rs 221.25 crore as of 31 December 2021. Cash and bank balance declined from Rs 336.62 crore as of 31 December 2021 to Rs 285.27 crore as of 31 December 2022.

PBDT rose 71.72% to Rs 2640.83 crore. Provision for depreciation rose 16.17% to Rs 617.19 crore. Fixed assets increased to Rs 7,514.62 crore as of 31 December 2022 from Rs 6,783.15 crore as of 31 December 2021. Intangible assets stood at Rs 24.23 crore.

Profit before tax grew 101.04% to Rs 2,023.64 crore. Share of profit/loss were nil in both the periods. Provision for tax was expense of Rs 473.52 crore, compared to Rs 260.56 crore. Effective tax rate was 23.40% compared to 25.88%.

Minority interest increased 1.31% to Rs 52.68 crore. Net profit attributable to owners of the company increased 115.75% to Rs 1,497.43 crore.

Equity capital increased from Rs 433.03 crore as of 31 December 2021 to Rs 649.55 crore as of 31 December 2022. Per share face Value remained same at Rs 10.00.

Promoters’ stake was 63.90% as of 31 December 2022 ,compared to 64.89% as of 31 December 2021 . Promoters pledged stake was 0.04% as of 31 December 2022 ,compared to 0.04% as of 31 December 2021 .

Business Highlights

Board recommended final dividend of Re 1 per Equity Share of the nominal value of Rs 10 each for the Financial Year ended December 31, 2022. With this, total dividend declared for year ended 31st December 2022 stands at Rs 3.50 per equity share.

In Q4 CY22, Net realization increased 6% to Rs 164 primarily due to price hike in select SKUs, rationalized discounts/incentives, and improvement in mix of smaller SKUs (250ml) especially the energy drink – Sting, which has a higher net realization.

Sales volume grew by 40.9% YoY in CY2022 to 802 million cases supported by strong performance in India as well as international territories. Sales volumes grew by 17.8% YoY in Q4 CY2022 to 132.0 million cases.

The Company has decided to opt for the new tax regime u/s 115 BAA of the Income Tax Act,1961 w.e.f. Assessment year 2023-24 after utilization of all unutilized Minimum Alternate Tax credit and other tax benefits/holidays available and hence the tax provision has been done accordingly.

In Q3 CY22, India sales volume grew by 22.1% to 14.8 crore cases and in international markets grew by 31.3% to 4.2 crore cases.

CSD constituted 70%, JBD 7% and Packaged Drinking Water 23% in CY2022.

During CY 2022, net capex (excluding foreign exchange loss and IndAS116 adjustments) included (1) Rs 630 crore for setting-up of new greenfield production facilities in Bihar & Jammu and brownfield expansion at Sandila facility. (2) Rs 250 crore towards brownfield expansion in Morocco and Zimbabwe and (3) Rs 370 crore towards land purchased for capacity expansion in future years.

Working capital days have remained stable at 36 days as on Dec 31, 2022.

Management Comments :
Mr. Ravi Jaipuria, Chairman, Varun Beverages Limited said, “We are pleased to close the year on a strong note with exceptional operational and financial performance reported throughout CY2022. The strong recovery in demand post the pandemic and our continued efforts towards expanding the distribution network across markets resulted in a 41% growth in consolidated sales volume. Additionally, we achieved growth in realization per unit through strategic measures such as selective price hikes, rationalized discounts and incentives, and improved product mix. This allowed us to deliver revenue growth of 49% and PAT growth of 108% YoY on a consolidated basis in CY 2022. We are excited to share that our energy drink, Sting, had a remarkable year, contributing significantly to both volume and realization growth. As the product is in an expanding category, we anticipate its strong performance to sustain in the coming year. Our recent launches in the value-added Dairy segment have also been well-received by consumers, and we are confident that these products will continue to drive growth in the future. As a leading beverage company serving over 1.3 billion customers globally through our extensive network of over 3 million retail outlets, we take our responsibility to the environment seriously. We are committed to sustainable & responsible operations and have taken a proactive stance in promoting sustainability in the beverage industry. Our aim is to minimize our impact on the environment and foster sustainable practices throughout our supply chain. Looking forward, we aim to further strengthen our position as a key player in the beverage industry by leveraging our strong presence in fast-growing markets, solid infrastructure, and well-established distribution network. Our focus remains on delivering high-quality products, further expanding our reach in key markets, and capitalizing on new opportunities to create sustainable long-term value for all stakeholders.”

Varun Beverages : Consolidated Results

	Quarter ended			Year ended
Particulars	202212	202112	Var.(%)	202212	202112	Var.(%)
Net Sales (including other operating income)	2,214.24	1,734.34	27.67	13,173.14	8,823.23	49.30
OPM (%)	13.89	11.97	192 bps	21.17	18.75	241 bps
OP	307.50	207.57	48.14	2,788.10	1,654.64	68.50
Other Inc.	9.25	0.85	988.24	38.85	67.93	-42.81
PBIDT	316.75	208.42	51.98	2,826.95	1,722.57	64.11
Interest	47.48	37.29	27.33	186.12	184.70	0.77
PBDT	269.27	171.13	57.35	2,640.83	1,537.87	71.72
Depreciation	179.66	129.27	38.98	617.19	531.26	16.17
PBT	89.61	41.86	114.07	2023.64	1006.61	101.04
Share of Profit/(Loss) from Associates	-0.01	0	-	-0.01	0	-
PBT before EO	89.6	41.86	114.05	2023.63	1006.61	101.03
EO Income	0	0	-	0	0	-
PBT after EO	89.6	41.86	114.05	2023.63	1006.61	101.03
Taxation	8.08	9.27	-12.84	473.52	260.56	81.73
PAT	81.52	32.59	150.14	1550.11	746.05	107.78
Minority Interest (MI)	6.77	16.1	-57.95	52.68	52	1.31
Net profit	74.75	16.49	353.31	1497.43	694.05	115.75
P/(L) from discontinued operations net of tax	0	0	-	0	0	-
Net profit after discontinued operations	74.75	16.49	353.31	1497.43	694.05	115.75
EPS (Rs)*	1.15	0.25	353.31	23.05	10.69	115.75

* EPS is on current equity of Rs 649.55 crore, Face value of Rs 10, Excluding extraordinary items.
# EPS is not annualised
bps : Basis points
EO : Extraordinary items
Figures in Rs crore
Source: Capitaline Corporate Database

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