Varun Beverages rises on strong Q4 profit

Bengaluru, 6 February: Shares of Pepsico India bottler Varun Beverages were up more than 3% today.

This comes a day after it reported a nearly 77% surge in its quarterly profit on Monday, as it saw double-digit volume growth across domestic and international markets even as higher costs of essentials weighed on consumers.

Consolidated net profit rose to ₹132 crore ($15.9 million) for the fourth quarter ended 31 December 2023, compared with ₹74.7 crore in the year-ago period.

Consumers in cities with higher average incomes, compared with their counterparts in the hinterlands, have helped makers of packaged goods pull in massive sales, even in the face of higher prices of essentials.

The Gurugram-based company, with operations across six countries, is one of PepsiCo's largest franchisees outside the United States, and packages and distributes beverages under Pepsi, Mirinda and Tropicana labels.

Varun Beverages said in its investor presentation that it saw a 21% surge in its revenue from operations at ₹2,731 crore in the reported period, and also an upbeat volume growth.

The cost of raw materials, which include flavoured concentrate, packaging material and sugar, edged 1.8% higher during the quarter.

Varun Beverages' earnings before interest, taxes, depreciation and amortisation (EBITDA) margin expanded to 15.7% from 13.9% a year earlier, aided by softer packaging costs amid an uptick in sugar prices.

Last year, the company announced its foray into the South African markets with the acquisition of The Beverage Company, which analysts expect will aid the Indian bottler.

Additionally, Varun Beverages approved a final dividend of ₹1.25 per share for the financial year ended 31 December 2023.

($1 = 83.0180 Indian rupees)

(The story has been published from Reuters without any major changes)