Capitaline

Results 03-May-23

Analysis

Varun Beverages

NP up 68.79%

For the quarter ending Mar 2023, consolidated Net sales (including other operating income) of Varun Beverages has increased 37.68% to Rs 3892.98 crore compared to quarter ended Mar 2022. Operating profit margin has jumped from 18.78% to 20.50%, leading to 50.29% rise in operating profit to Rs 798.03 crore. Raw material cost as a % of total sales (net of stock adjustments) decreased from 48.95% to 47.59%. Purchase of finished goods cost rose from 2.00% to 2.95%. Employee cost decreased from 9.26% to 8.22%. Other expenses fell from 21.92% to 21.91%.

Other income rose 19.15% to Rs 10.14 crore. PBIDT rose 49.79% to Rs 808.17 crore. Provision for interest rose 33.24% to Rs 62.57 crore.

PBDT rose 51.37% to Rs 745.6 crore. Provision for depreciation rose 31.13% to Rs 172.2 crore.

Profit before tax grew 58.73% to Rs 573.40 crore. Share of profit/loss were nil in both the periods. Provision for tax was expense of Rs 134.8 crore, compared to Rs 90.14 crore. Effective tax rate was 23.51% compared to 24.95%.

Minority interest decreased 43.75% to Rs 9.50 crore. Net profit attributable to owners of the company increased 68.79% to Rs 429.07 crore.

Promoters’ stake was 63.90% as of 31 March 2023 ,compared to 64.89% as of 31 March 2022 . Promoters pledged stake was 0.04% as of 31 March 2023 ,compared to 0.04% as of 31 March 2022 .

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 6,963.71 crore as of 31 December 2022 from Rs 6,783.15 crore as of 31 December 2021. Intangible assets increased from Rs 24.23 crore to Rs 575.14 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 .

Cash flow from operating activities increased to Rs 1,790.03 crore for year ended December 2022 from Rs 1,231.42 crore for year ended December 2021. Cash flow used in acquiring fixed assets during the year ended December 2022 stood at Rs 1,800.99 crore, compared to Rs 834.80 crore during the year ended December 2021.

Business Highlights

Board approved split of existing Equity Shares of the Company from (One) Equity Share having face value of Rs 10 each fully paid-up, into (Two) Equity Shares having face value of Rs 5 each fully paid-up. Record date for the same will be decided soon.

Company commissioned a new production facility at Kota, Rajasthan, as well as expanded its capacity at six existing locations.

In Q1 CY23, Net realization increased by 10.4% to Rs 173.7 primarily due to price hike in selected SKUs taken towards the end of base quarter last year and continued improvement in mix of smaller SKUs (250ml).

Sales volume grew by 24.7% to 224.1 million cases in Q1 CY2023 from 179.7 million cases in Q1 CY2022 driven by strong demand across regions in India. Domestic volumes grew by 28.0% YoY.

Depreciation increased by 31% and Finance cost increased by 33% in Q1 CY2023 on account of capitalization of assets and setting-up of new production facilities.

CSD constituted 71.2%, JBD 7.4% and Packaged Drinking Water 21.4% in CY2023.

Management Comments :
Mr. Ravi Jaipuria, Chairman, Varun Beverages Limited said, “We are pleased to share that the Company achieved remarkable operational and financial performance during the quarter despite weather disruptions in some parts of India in the month of March. Moving onto our expansion plans, we are happy to report the commissioning of our greenfield production facility at Kota, Rajasthan and brownfield expansion at 6 facilities. The additional Greenfield plant in Jabalpur, MP is expected to be operational very soon. With regard to our international growth plans, construction of a new production facility in DRC has already started. We expect the facility to be operational before the year end. Our energy drink product has achieved a significant share in our overall mix and has firmly established our leadership position in the category. Our focus now turns towards new performers like Value Added Dairy, Sports Drinks, and Juice segments to sustain the growth momentum. These products continue to be well received by consumers, providing us with the confidence that these products will fuel the Company`s next leg of growth. It gives me immense pleasure to announce, as approved by shareholders in our annual general body meeting, the final dividend of Re. 1 per share taking the total dividend payout for the full year to level of Rs. 3.5 per share. Furthermore, the Board recommended the split of existing equity shares of the Company from One equity share having face value of Rs. 10 each into Two equity shares having face value of Rs. 5 each. This is subject to the approval of equity shareholders of the Company. We are also committed to safeguarding our environment and promoting sustainability in all our operations. One of the key ways we are doing this is by investing in PET recycling and implementing measures to improve energy and water efficiency. Our goal is to have a net positive impact on the environment, and we are continuously evaluating and implementing new ways to minimize our ecological footprint. Overall, we are encouraged by our strong start and remain confident about delivering good performance this year. With our robust on-ground execution capabilities, expanding manufacturing capacities, and increasing distribution reach, we believe we are well-positioned to achieve sustainable growth in the medium to long term.”

Varun Beverages : Consolidated Results

	Quarter ended			Year ended
Particulars	202303	202203	Var.(%)	202212	202112	Var.(%)
Net Sales (including other operating income)	3,892.98	2,827.47	37.68	13,173.14	8,823.23	49.30
OPM (%)	20.50	18.78	172 bps	21.17	18.75	241 bps
OP	798.03	531.01	50.29	2,788.10	1,654.64	68.50
Other Inc.	10.14	8.51	19.15	38.85	67.93	-42.81
PBIDT	808.17	539.52	49.79	2,826.95	1,722.57	64.11
Interest	62.57	46.96	33.24	186.12	184.70	0.77
PBDT	745.60	492.56	51.37	2,640.83	1,537.87	71.72
Depreciation	172.2	131.32	31.13	617.19	531.26	16.17
PBT	573.40	361.24	58.73	2023.64	1006.61	101.04
Share of Profit/(Loss) from Associates	-0.03	0	-	-0.01	0	-
PBT before EO	573.37	361.24	58.72	2023.63	1006.61	101.03
EO Income	0	0	-	0	0	-
PBT after EO	573.37	361.24	58.72	2023.63	1006.61	101.03
Taxation	134.8	90.14	49.55	473.52	260.56	81.73
PAT	438.57	271.1	61.77	1550.11	746.05	107.78
Minority Interest (MI)	9.5	16.89	-43.75	52.68	52	1.31
Net profit	429.07	254.21	68.79	1497.43	694.05	115.75
P/(L) from discontinued operations net of tax	0	0	-	0	0	-
Net profit after discontinued operations	429.07	254.21	68.79	1497.43	694.05	115.75
EPS (Rs)*	6.61	3.91	68.79	23.05	10.69	115.75

* EPS is on current equity of Rs 649.56 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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