Beverage Company, which is in the production and distribution of a wide range of non-carbonated drinks, carbonated soft drinks, and packaged water which is sold under trademarks and owned by PepsiCo, surged 5 percent from the day’s low after releasing its Q4CY24 results.
Price Movement
In Monday’s trading session, Varun Beverages’s share price was down by 3.88 percent to the day’s low of Rs. 532.50 in morning trade. The stock reiterated and touched a day’s high of Rs. 561 which is 5.35 percent from the day’s low.
The stock price closed at Rs. 548.55 which is 0.98 percent lower from the previous close of Rs. 554 per share. In the past year, the stock has had a negative return of around 3 percent and has underperformed the Nifty Index.
Q3CY25 & CY24 financial performance
Varun Beverages’s stock surged after reporting financial results for the quarter ending December 2024, The consolidated revenue from operations has increased by 39.78 percent year on year from Rs. 2,730.98 crore in Q4CY23 to Rs. 3,817.61 crore in Q4CY24 and declined by 22.59 percent quarter on quarter from Rs. 4,932.06 crore in Q3CY24. The company was able to deliver a 3-year revenue CAGR of around 28.61 percent consistently for the December 2024 quarter.
The company’s consolidated net profits have increased by around 36.08 percent year on year from Rs. 143.76 crores in Q4CY23 to Rs. 195.64 crores in Q4CY24. As compared to Q3CY24, the company’s net profits have declined by 68.88 percent quarter on quarter from Rs. 628.82 crore.
Annually, they earned revenue from operations of Rs. 20,481.32 crores, an increase of 25.49 percent from Rs. 16,321.06 crores. Net Profits saw an increase of 25.3 percent from Rs. 2,101.81 crore to Rs. 2,634.28 crore. The EBITDA margins stood at 23.5 percent for the CY24. The Gross margins rose 55.5 percent as of CY24, an increase from 53.8 percent in CY23. Varun Beverages consolidated sales volume increased by 23.2 percent to 112.44 crore cases in CY24.
Dividend Announcements
The Board of Directors on 10th February 2025, has approved the payment of the final dividend of Rs. 0.50 per equity share on the face value of Rs. 2 per equity share subject to the shareholder’s approval of the company.
Business Segment & Capex Plans
The company recognizes its revenue from the manufacturing and sale of beverages only as its sole segment. The expected CY25 capex is around 3,100 crore and out of Rs. 2,000 crore is towards setting up greenfield facilities in Prayagraj, Buxar, Damtal, and Meghalaya in India. Further, the remaining capex will be towards snack manufacturing in Sricity (Brownfield), the rPET facility in India, and expansion in DRC.
Future Plans
The recent acquisition of Tanzania Bottling Company SA (Equity Value ~$154.50 Million) and SBC Beverages Ghana (Equity Value ~$15.06 Million) is expected to be completed on or before 28th February 2025 for Ghana and 31st March 2025 for Tanzania.
Varun Beverages Morocco SA has entered into an exclusive snack appointment agreement for manufacturing “Cheetos” in Morocco, expected to start on 1st May ‘25 and this is in addition to a distribution agreement for snack portfolio products including Lays, Cheetos, and Doritos in that country.
Varun Zimbabwe and Varun Zambia entered into the same agreement with Premier Nutrition Trading to manufacture and sell “Simba Munichez” in Zimbabwe and Zambia. Distribution is expected to start on 1st February 2025 and manufacturing is expected to start in Zimbabwe on or before 1st October ‘25 and for Zambia on or before 1st April ‘26.
Brokerage Target
Axis Securities, one of the prominent brokerage firms had given an “Equal-weight” rating with a target price of Rs. 700 per share which indicates an upside target of 27.60 percent from its closing price as of 10th February 2025. The rationale includes Consistent top and bottom line performance despite the challenging environment, commissioning of multiple greenfield and brownfield manufacturing, and expanding into South African territory
Company Overview
Varun Beverages Limited operates as a franchisee of PepsiCo. They produce and distribute a range of carbonated soft drinks, as well as a large selection of non-carbonated beverages which includes drinking water packaged and sold under trademarks owned by PepsiCo.
Brands
PepsiCo brands sold and produced by VBL include Diet Pepsi, Pepsi, Mirinda Orange, Seven-Up, Mountain Dew, Mirinda Lemon, Seven-Up Nimbooz Masala Soda, Mountain Dew Ice, Sting, Evervess, Slice Fizzy Drinks, and Gatorade. Noncarbonated drinks of PepsiCo brands include Tropicana Juices, Tropicana Slice, and Nimbooz. They are into packaged drinking water with their brand Aquafina.
Written by Santhosh S
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