Varun Beverages Consolidated Net Profit up by 56.9% YoY to Rs. 240 Cr. | Q3CY21 Results and Earnings Call Highlights

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Varun Beverages, the largest franchisee of PepsiCo in the world (Outside USA) has announced its Quarterly Result for Q3CY21 on Friday 29th October 2021. The Company has registered a decent quarter when compared on yearly basis but has underperformed as per its previous quarter performance. The topline growth and bottom-line growth of the company has been quite impressive on a YoY basis. Let’s discuss more about the Quarterly Performance of the company along with the Earnings Call Highlights in this article. Do Note that the Company follows a Calendar Year i.e., from 1st January to 31st December, hence July-September Quarter will be its Q3.

Q3CY21 Result Update:

Varun Beverages- Q3CY21 Result
Varun Beverages- Q3CY21 Result
  • The Consolidated Revenue from Operations of the company has gone up by 35.9% YoY from Rs. 1,803 Cr. in the quarter ended 30th September 2021 against Rs. 2,398 Cr. in the quarter ended 30th September 2020. While the revenue from operation of the company has decreased by 2.1% QoQ from Rs. 2,450 Cr. in Q2CY21.
  • The Volume Growth stood at 28.4% in Q3CY21 against -4% in the same quarter of the previous year.
  • The Earnings before Interest, Taxes, Depreciation & Amortisation (EBITDA) of the company have also gone up by 29.9% YoY from Rs. 381 Cr. in Q3CY20 to Rs. 495 Cr. in Q3CY21. Sequentially, the EBITDA of the company has gone down by 13.3% QoQ from Rs. 571 Cr. in the Q2CY21.
  • The EBITDA margin stood at 20.6% in the September Quarter of Calendar Year 2021 contracting by 50 bps YoY and 240 bps QoQ.
  • The Profit Before Tax (PBT) of the company has grown by a remarkable 82.8% YoY to Rs. 350 Cr. in Q3CY21 against Rs. 192 Cr. in the same period of the previous financial year. Quarter-on-Quarter, the PBT of the company has gone down by 16.5% from Rs. 420 Cr. in Q2CY21
  • Further, the company has a registered net profit of Rs. 240 Cr. up by 56.9% YoY from Rs. 153 Cr. in the Q3CY20. Sequentially, this figure too has gone down by 22.1% from Rs. 308 Cr. in the Q2CY21.
  • The Net Profit Margin stood at 9.8% in Q3CY21 expanding by 150 bps YoY but falling by 260 bps QoQ.

9MCY21 Performance:

The Performance of the company in the 9-month ended 30th September 2021 period are as follows:

Varun Beverages- 9MCY21 Result
Varun Beverages- 9MCY21 Result

Quarterly Performance:

  • Strong volume growth of 28.4% YoY to 15.3 Cr. cases in Q3CY2021 as compared to 11.95 Cr. cases in Q3CY2020.
  • Revenue growth was driven by robust volume growth over last year and higher realization on a consolidation basis.
  • Realization per case is improved by 3.6% to Rs. 156.4 per case in Q3CY21 driven by higher realization in International Territories despite the increase in the share of water in the overall mix.
  • Margins were affected due to an increase in pet prices which was around ~18% and a marginal increase in sugar prices of around 2% in India.

Key Developments:

  • CRISIL (an S&PvGlobal Company) has reaffirmed the long-term rating for bank loan facilities as CRISIL AA/Positive (Outlook revised from ‘Stable’ to ‘Positive’) and reaffirmed for short-term instruments as CRISIL A1+.
  • During the quarter, an amount of Rs. 20 Cr. from the total foreign currency provisions in Zimbabwe was reversed due to a corresponding reduction in the total foreign currency liability in Zimbabwe.

Earnings Call Highlights:

Business Performance:

  • The Company’s volumes grew by 28.4% YoY to 153 mn cases in 3QCY21 from 119 mn cases in 3QCY20 led by the outperformance of Energy drink which has shown a growth of almost 700% YoY.
  • The company was able to maintain a high-profit margin of 20% during the quarter primarily driven by high operational efficiency and also because of a decrease in debt level and cost of borrowings.
  • The current debt level stood at Rs 2400 Cr, Lower by Rs 600 Cr compared to last year and the company is planning to reduce it further going forward.
  • Dairy-based beverages portfolio which company has launched in north region market shown a growth of almost 57% and Tropicana growth is almost 40% YoY management has planned some new launches in a dairy portfolio which is further going to add to the growth.


  • Dairy-based beverages portfolio which company has launched in north region market shown a growth of almost 57% and Tropicana growth is almost 40% YoY management has planned some new launches in a dairy portfolio which is further going to add to the growth.
  • Company is targeting to increase the number of outlets by 10-15% which is close to almost 300000 outlets next year.
  • Capex guidance for the long-term going to be close to the depreciation figure Management said if CY22 is going to be a normal year then the company expects good growth in all the margins.
  • The company is setting up a new plant for the manufacturing of juice, carbonated soft drinks, and packaged drinking water at Baruni, Begusarai, Bihar with the CAPEX of Rs. 285 Cr. Expected to get commercialized in the next 6 months. Management believes that this is going to help them in gaining market share in the Bihar market.
  • The company is putting 4 lines of manufacturing in this Bihar greenfield plant with a capacity of CSD line 720 bottles/minute, juice line-300 bottles/minute, water line – 300 bottles/minute, Glass line 600 bottles/minute.
  • The company is also setting up a new plant for manufacturing of plastic preforms and plastic closures at Kathua, Jammu & Kashmir with a Capex of Rs.190Cr which is expected to get operational by next year march.

What Should Investors Do?

Till November 2021, Varun Beverages Stock has yielded more than 40% returns in this calendar year beating the Nifty 50 index by a huge margin, which has delivered returns of around 25% during the same period. The Company has also delivered a strong quarter and has given positive comments as well. Individuals looking for allocation in the FMCG sector can keep this stock on its radar. Do not consider this as direct investment advice and hence do follow due diligence before making any investment decisions.

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