Varun Beverages shares fall 5% as Q2 margins shrink after Twizza acquisition in South Africa; net profit rises 15%

Shares of Pepsi bottler Varun Beverages fell as much as 5% to an intraday low of Rs 439 on the BSE on Tuesday after the company's EBITDA margin contracted by 76 basis points to 27.7% in the second quarter of CY2026, primarily due to the consolidation of the Twizza business in South Africa, which currently operates at lower margins.

The company follows a calendar-year reporting cycle, with its financial year running from January to December.

Varun Beverages reported a 20.4% year-on-year (YoY) increase in revenue from operations (net of excise duty and GST) to Rs 8,451.23 crore in Q2 CY2026, compared with Rs 7,017.37 crore in the corresponding quarter of CY2025.


Profit after tax (PAT) rose 15.1% year-on-year to Rs 1,525.36 crore from Rs 1,325.49 crore, driven by strong volume growth across India and international markets.

Varun Beverages Q1 highlights

Consolidated sales volumes rose 19.8% year-on-year to 466.7 million cases from 389.7 million cases, driven by 14.4% volume growth in India and a 38.4% increase across international markets. The international business included 11.8 million cases from the recently acquired Twizza operations in South Africa.

Gross margin expanded by 44 basis points to 55% in Q2 CY2026, supported by a higher contribution from the international business. In India, early procurement of key raw materials and lower sugar consumption, aided by a higher mix of low- and no-sugar products, helped offset inflationary pressure on input costs.

Depreciation rose 33.6%, primarily due to the commissioning of new plants in India last year and the acquisition of Twizza. Finance costs increased 55.8%, largely on account of the Twizza acquisition.

Management commentary

The management said it remains confident about the long-term growth potential across its markets, driven by favourable demographics, rising disposable incomes and increasing consumption of packaged beverages.

With adequate manufacturing capacity, a diversified product portfolio, strong partnerships and an extensive distribution network, the company believes it is well positioned to deliver sustained, profitable growth and create long-term value for stakeholders.

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