Anand Rathi's research report on Varun Beverages
Revenue from operations net of excise and GST stood at the level of Rs. 70,174 million in Q2 CY2025, down 2.5% YoY. For H1 CY25, revenue grew by 9.3% to Rs. 125,843 million. The decline in Q2 was primarily due to a 3% drop in consolidated sales volume, which stood at 389 million cases. In India, volumes were impacted by abnormally high and unseasonal rainfall all through the quarter, resulting in a 7.1% decline in India. However, this was partially offset by healthy growth in international markets where volumes grew 15.1% led by a growth of 16.1% in South Africa. Net realization per case at the consolidated level improved marginally by 0.% supported by a favorable mix in the international markets per case realization recorded a 6.6% increase. CSD accounted for 75% of the total volumes in Q2 CY25 with packaged drinking water contributing 18% and NCB making up the remaining 7%. EBITDA remained flat at Rs. 19,988 million from Rs. 19,912 million in Q2 CY24. EBITDA margin improving by 82 basis points YoY to 28.5% in Q2 CY25, driven by operational efficiencies and a strong currency in international operations. PAT grew by 5% to the level of Rs. 13,255 million as compared to Rs 12,618 million in Q2 CY24, supported by improved operational efficiencies and lower finance costs.
Outlook
We expect VBL to see strong growth going forward due to many factors such as: 1) Strategic investment in enhancing production capabilities and making new acquisitions which have significantly strengthened their global presence 2) Increasing its presence in the domestic market and looking for exports opportunities. We maintain BUY rating on the stock with a target price of ₹ 630 per share.
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