Varun Beverages shares rally over 4% after Q1 profit jumps 81% sequentially

Shares of Varun Beverages climbed as much as 4.3% on Wednesday to Rs 534 on the BSE after PepsiCo’s bottling partner posted an 81.2% sequential jump in profit after tax (PAT) for the first quarter of FY26 and a 5% year-on-year (YoY) surge to Rs 1,325.49 crore, even as revenue declined and domestic sales volumes came under pressure.

The company’s PAT rose from Rs 1,261.83 crore in Q1 FY25 and sharply from Rs 731.36 crore in the preceding March quarter. However, revenue from operations declined 2.3% YoY to Rs 7,333.67 crore from Rs 7,513 crore.

In its Q1 FY26 results announced Tuesday, the company also declared an interim dividend of 25% of the face value, or Rs 0.50 per share, translating into a cash outflow of approximately Rs 169.1 crore.

Margin expansion and operational efficiency

Despite a drop in top-line growth, the company delivered a stable gross margin of 54.5% and reported EBITDA of Rs 1,998.77 crore. The EBITDA margin expanded 82 basis points year-on-year to 28.5% in Q2 CY2025 from 27.7% in the same quarter a year ago.

This margin expansion came despite higher fixed overheads from newly commissioned capacity at four greenfield plants in India, which are yet to contribute incremental volumes.” The company said this was driven by operational efficiencies and favourable currency movements in international markets.

Sales volume in India fell 7.1%, while international markets showed strength with volumes rising 15.1%. South Africa led the overseas performance with a 16.1% increase, helping cushion the overall decline.

Varun Beverages continued to maintain a strong financial footing, ending the quarter net debt-free with free cash of Rs 514.90 crore.

Also read | Varun Beverages Q1 Results: PAT up 5% YoY despite 2% dip in revenue

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