Varun Beverages shares jump over 4% post Q2 results; Goldman Sachs sees strong growth potential

The beverage company on Tuesday had reported a 5% increase in its standalone net profit to ₹1,325.4 crore in the second quarter of the calendar year 2025 as compared to ₹1,261.8 crore a year back. The company follows the calendar year as its fiscal year.

Its revenue from operations declined 2.5% to ₹7,017.3 crore in Q2 CY25, compared to ₹7,196.8 crore a year back.

The company's board also approved an interim dividend of ₹0.50 per equity share for CY2025. The record date is August 2, while the payment date is August 5.

The beverage firm's EBITDA registered a modest 0.4% YoY growth, amounting to ₹1,998.77 crore. EBITDA margins increased by 82 basis points (bps) in the quarter under review to 28.5% from 27.7% in Q2 CY2024, despite an increase in fixed overheads due to new capacity being commissioned at four greenfield plants in India, which all are yet to yield incremental volumes.

• Consolidated sales volume fell 3.0% to 389.7 million cases in Q2 CY2025, down from 401.6 million cases in Q2 CY2024, mainly due to unseasonal rainfall across India.

• India volumes declined by 7.1%, while international volumes rose 15.1%, with South Africa alone growing at 16.1%, partially offsetting the overall drop.

• Net realisation per case at the consolidated level rose 0.5%, led by a 6.6% improvement in international markets.

• Gross margins held steady at 54.5% in Q2 CY2025.

• EBITDA margins rose by 82 bps to 28.5% in Q2 CY2025 from 27.7% in Q2 CY2024, despite higher fixed overheads from new greenfield plants in India yet to deliver incremental volumes.

• PAT grew by 5.0% to ₹13,25.49 crore in Q2 CY2025 from ₹12,61.83 crore in Q2 CY2024, supported by operational efficiencies and reduced finance costs.

Analysts at Goldman Sachs believe the company has a strong potential for good growth. It also said that the firm’s India business saw a 7% YoY decline in volume as the monsoon started early in India.

Goldman expects the company to see volume recovery of 10% YoY in the second half of the calendar year.

Nuvama in a note said Varun Beverages EBITDA remained flat on a yearly basis, but it was higher than their estimates. However, revenue was a little below their estimate. It also said that the September quarter is likely to be affected by heavy monsoon rainfall.

CLSA maintained its outlook for the firm on the back of strong margin expansion amid volume decline as VBL flexes cost levers. It further said that domestic realisation was driven lower by mix. Meanwhile, EBITDA margin expansion was driven by operational efficiencies.

On Wednesday, shares of Varun Beverages were trading at ₹526.30 apiece on the National Stock Exchange, rising 2.76%.

Over the last five trading days, the stock has soared over 7%, while for a month’s period, it has gained nearly 14%.

However, since the beginning of the year, it has declined over 20%.

The company’s market capitalisation stands at ₹1.76 lakh crore.

Shares of the firm had touched their one-year high of ₹681.12 apiece on July 29, 2024, while their 52-week low of ₹419.55 was hit on March 3, 2025.