VBL - Varun Beverages Limited Share Price

In the earnings conference call held on February 3, 2026, management provided an optimistic outlook for Varun Beverages Limited. For the calendar year 2025, consolidated volumes saw a growth of 7.9%, leading to an 8.4% increase in revenues, with EBITDA rising by 7.2%. Importantly, profit after tax (PAT) increased substantially by 16.2% to Rs. 30,620.4 million. These results were achieved despite challenges posed by weather disruptions during peak summer, which impacted sales volume in parts of India.

In Q4, the company experienced a strong recovery with domestic volumes growing by 10.5%. Management highlighted that new greenfield plants and backward integration initiatives are stabilizing, supporting higher volumes moving forward. The performance in international markets was also noteworthy, particularly with African volumes growing by 10% in Q4, underpinned by expanded distribution and cost efficiencies.

Moving forward, management is confident about long-term growth prospects, backed by favorable demographics in India and international markets. Key forward-looking points include:

• Anticipated double-digit volume growth in CY 2026, dependent on favorable weather conditions.
• Continued focus on enhancing product mix, with low and no sugar beverages representing approximately 59% of total volumes.
• Plans to maintain profitability despite the addition of new production facilities and any cost inflation from the recent labor codes.
• The expectation that the recently proposed acquisition of Twizza in South Africa will significantly bolster production capacity and market reach.

Management is also committed to delivering shareholder value, as evidenced by the proposed final dividend of Rs. 0.50 per equity share, subject to approval. Overall, the company is poised for sustained growth, leveraging its distribution strength and expanding product portfolio.

Here are some major questions and detailed answers from the Q&A section of the earnings transcript for Varun Beverages Limited's conference call held on February 3, 2026:

1. Question: "If I see India volumes has grown double digit, 10.5%, but India sales has grown around 6%... Do you still expect the pricing mix to be slightly negative?"

   Answer: "The 4% gap isn't primarily due to mix changes. The year was tough; competition led to discounting. We focused on sustaining volume growth, which is what matters long-term. We believe that sales volume growth will recover in peak season, which will offset current shortfalls."

2. Question: "Any initial expectation, how do you see this quarter and next quarter given the base is a bit favourable?"

   Answer: "The first quarter last year was strong, with growth of about 15%-16%. While the second and third quarters were weak last year, maintaining our EBITDA and margins despite recent challenges makes us optimistic for better projections this year, barring weather issues."

3. Question: "Would mid-teen volume growth in CY 2026 be a tall task or achievable?"

   Answer: "We consistently aim for double-digit growth and believe it remains achievable. Last year's unprecedented rains were an anomaly; with typical weather patterns, we anticipate meeting our growth targets this year."

4. Question: "What is the revenue contribution from snacks in CY 2025, and what run rate can we expect for CY 2026?"

   Answer: "Snacks revenue was approximately Rs. 340 crore in CY 2025. With full operations in Zimbabwe and Morocco ramping up, we anticipate significantly higher volumes and better realization in CY 2026 as these facilities stabilize."

5. Question: "What does the current EBITDA margin guidance for India look like for CY 2026?"

   Answer: "Our guidance remains at 22%-23% for margins, which we consider realistic. If we can maintain current levels, we'll be satisfied; however, improvements in volumes could allow for favorable conditions and better margins."

6. Question: "Can you share any insights about product innovation for the summer season?"

   Answer: "We are focusing on expanding our differentiated product portfolio, especially in energy drinks and flavors. New products like Nimbooz Jeera will launch around March, enhancing our market reach and catering to consumer preferences."

7. Question: "How do you plan to allocate capital between the core non-alcoholic portfolio and alcoholic beverages?"

   Answer: "The initial focus is on our partnership with Carlsberg in Africa with minimal capex this year. We want to see how this venture develops before committing significant resources toward alcoholic beverages."

8. Question: "Can you detail the employee benefit expense increase of 22% YoY in Q4?"

   Answer: "The majority of this increase was from the four new greenfield plants and costs associated with the implementation of the new labor laws. There's also a one-time cost from our 30-year company celebration event."

These responses encapsulate the major inquiries and sentiments shared during the earnings call, providing a concise overview of Varun Beverages Limited's performance outlook and strategies.