Capitaline

Results 05-Feb-24

Analysis

Varun Beverages

OPM jumped 179 bps

For the quarter ending Dec 2023, consolidated Net sales (including other operating income) of Varun Beverages has increased 20.48% to Rs 2667.69 crore compared to quarter ended Dec 2022. Operating profit margin has jumped from 13.89% to 15.68%, leading to 36.03% rise in operating profit to Rs 418.28 crore. Raw material cost as a % of total sales (net of stock adjustments) decreased from 47.96% to 42.84%. Purchase of finished goods cost rose from 1.71% to 3.62%. Employee cost increased from 12.92% to 13.16%. Other expenses rose from 24.99% to 25.56%.

Other income fell 1.41% to Rs 9.12 crore. PBIDT rose 34.93% to Rs 427.4 crore. Provision for interest rose 55.14% to Rs 73.66 crore.

PBDT rose 31.37% to Rs 353.74 crore. Provision for depreciation fell 7.62% to Rs 165.97 crore.

Profit before tax grew 109.54% to Rs 187.77 crore. Provision for tax was expense of Rs 44.22 crore, compared to Rs 8.08 crore. Effective tax rate was 23.52% compared to 9.02%.

Minority interest increased 74.15% to Rs 11.79 crore. Net profit attributable to owners of the company increased 76.55% to Rs 131.97 crore.

Promoters’ stake was 63.09% as of 31 December 2023 ,compared to 63.90% as of 31 December 2022 . Promoters pledged stake was 0.04% as of 31 December 2023 ,compared to 0.04% as of 31 December 2022 .

Full year results analysis.

Net sales (including other operating income) of Varun Beverages has increased 21.78% to Rs 16042.58 crore. Operating profit margin has jumped from 21.17% to 22.50%, leading to 29.46% rise in operating profit to Rs 3,609.49 crore. Raw material cost as a % of total sales (net of stock adjustments) decreased from 47.47% to 43.57%. Purchase of finished goods cost rose from 1.39% to 2.87%. Employee cost decreased from 9.00% to 8.97%. Other expenses rose from 21.51% to 22.21%.

Other income rose 104.27% to Rs 79.36 crore. PBIDT rose 30.49% to Rs 3688.85 crore. Provision for interest rose 44.05% to Rs 268.1 crore.

PBDT rose 29.53% to Rs 3420.75 crore. Provision for depreciation rose 10.32% to Rs 680.91 crore.

Profit before tax grew 35.39% to Rs 2,739.84 crore. Share of profit/loss was 4,700% lower at Rs -0.48 crore. Provision for tax was expense of Rs 637.55 crore, compared to Rs 473.52 crore. Effective tax rate was 23.27% compared to 23.40%.

Minority interest decreased 12.89% to Rs 45.89 crore. Net profit attributable to owners of the company increased 37.30% to Rs 2,055.92 crore.

Promoters’ stake was 63.09% as of 31 December 2023 ,compared to 63.90% as of 31 December 2022 . Promoters pledged stake was 0.04% as of 31 December 2023 ,compared to 0.04% as of 31 December 2022 .

Business Highlights

Board recommended final dividend of Rs 1.25 per Equity Share of the nominal value of Rs 5 each for the Financial Year ended December 31, 2023.

Net realization per case increased by 7% in CY2023 to Rs 175.7 driven by continued improvement in mix of smaller SKUs (250ml) in Indian Markets and improved realization per case in International markets.

Consolidated sales volume grew by 13.9% to 912.9 million cases in CY2023 from 801.8 million cases in CY2022 led by double-digit growth in both Indian (12.9% growth) & International (18.0% growth) markets.

For CY2023 season, company commissioned new production facilities at Bundi, Rajasthan and at Jabalpur, Madhya Pradesh, as well as expanded its capacity at six existing locations namely Pathankot, Kosi, Bharuch, Tirunelveli, Begusarai and Guwahati.

Subsequent to year ended 31 December 2023, the Company has started commercial production including backward integration at its new greenfield production facility at Supa, Maharashtra.

Company entered into a binding agreement to acquire 100% stake in the business conducted by The Beverage Company (Proprietary), South Africa along-with its wholly[1]

owned subsidiaries (BevCo), with an option to accept minority co-investment from large equity fund, subject to regulatory and other approvals. BevCo is engaged in the business of manufacturing and distribution of licensed (PepsiCo Inc.) / own-branded non-alcoholic beverages in South Africa and has franchise rights from PepsiCo Inc. in South Africa, Lesotho and Eswatini. Proposed transaction is at an Enterprise Level is valued at ZAR 3 Billion (Rs 13.20 bn; 1 ZAR = 4.4 INR).

CSD constituted 72%, JBD 6% and Packaged Drinking Water 22% in CY23.

Management Comments :
Mr. Ravi Jaipuria, Chairman, Varun Beverages said: “Despite the abnormally high unseasonal rains in the peak season, we are pleased to conclude CY2023 on a strong note. We witnessed a healthy double-digit volume growth in both Indian and International markets. Our consolidated sales volume increased by 13.9%, and the net realization per case increased by 7.0% in CY2023. Both these together contributed to our remarkable revenue growth of 21.8% and an impressive PAT growth of 35.6%. In line with our strategic objectives, we have successfully commissioned multiple greenfield and brownfield facilities across key geographies during the year. This expansion not only strengthened our manufacturing capabilities but also extended our market reach. Our distribution network and chilling infrastructure have also seen a substantial growth, further solidifying our presence in the market. Marking a key milestone in our growth journey, we are delighted to announce the acquisition of The Beverage Company (BevCo) subject to regulatory and other approvals. BevCo holds franchise rights for PepsiCo beverage products in South Africa, Lesotho, and Eswatini, along with distribution rights in Namibia and Botswana. This acquisition, which aligns perfectly with our strategic goals, offers an excellent opportunity to significantly enhance our presence in the African market—a region known for high demand for soft drinks and favorable demographics. The integration of BevCo into VBL`s operations is expected to yield substantial synergistic benefits in the future. As we move forward, our strategy is geared towards sustaining our healthy growth momentum. We will continue to focus on strengthening our market position, both in India and internationally, and place emphasis on product categories that are aligned with evolving consumer preferences. Our journey through CY2023 has set a solid foundation for continued success, and we remain confident in our ability to deliver sustainable growth and value for all our stakeholders in the years to come.”

Varun Beverages : Consolidated Results

	Quarter ended			Year ended
Particulars	202312	202212	Var.(%)	202312	202212	Var.(%)
Net Sales (including other operating income)	2,667.69	2,214.24	20.48	16,042.58	13,173.14	21.78
OPM (%)	15.68	13.89	179 bps	22.50	21.17	133 bps
OP	418.28	307.50	36.03	3,609.49	2,788.10	29.46
Other Inc.	9.12	9.25	-1.41	79.36	38.85	104.27
PBIDT	427.40	316.75	34.93	3,688.85	2,826.95	30.49
Interest	73.66	47.48	55.14	268.10	186.12	44.05
PBDT	353.74	269.27	31.37	3,420.75	2,640.83	29.53
Depreciation	165.97	179.66	-7.62	680.91	617.19	10.32
PBT	187.77	89.61	109.54	2739.84	2023.64	35.39
Share of Profit/(Loss) from Associates	0.21	-0.01	LP	-0.48	-0.01	-4,700.00
PBT before EO	187.98	89.6	109.80	2739.36	2023.63	35.37
EO Income	0	0	-	0	0	-
PBT after EO	187.98	89.6	109.80	2739.36	2023.63	35.37
Taxation	44.22	8.08	447.28	637.55	473.52	34.64
PAT	143.76	81.52	76.35	2101.81	1550.11	35.59
Minority Interest (MI)	11.79	6.77	74.15	45.89	52.68	-12.89
Net profit	131.97	74.75	76.55	2055.92	1497.43	37.30
P/(L) from discontinued operations net of tax	0	0	-	0	0	-
Net profit after discontinued operations	131.97	74.75	76.55	2055.92	1497.43	37.30
EPS (Rs)*	1.02	0.58	76.55	15.82	11.52	37.30

* EPS is on current equity of Rs 649.66 crore, Face value of Rs 5, 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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