Summary
Varun Beverages Limited - Q4 CY2025 Earnings Call Summary Tuesday, February 03, 2026 12:00 PM
Event Participants
Executives 3 Raj Gandhi (President and Whole-Time Director), Ravi Jaipuria (Chairman), Varun Jaipuria (Executive Vice Chairman and Whole-Time Director)
Analysts 8 Abneesh Roy, Devanshu Bansal, Harit Kapoor, Jay Doshi, Latika Chopra, Onkar Ghugardare, Percy Panthaki, Rehan Saiyyed
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Consolidated Sales Volume | 1,213.1 million cases | +7.9% YoY for CY2025; Q4 volumes grew +10.2% YoY. |
| Revenue from Operations | ₹21,685.38 crores | +8.4% YoY; growth driven by steady volume and marginal realization gains. |
| EBITDA | ₹5,049.37 crores | +7.2% YoY; full-year margins at 23.3% vs 23.5% in CY2024. |
| Profit After Tax (PAT) | ₹3,062.04 crores | +16.2% YoY; driven by volume, lower finance costs, and high other income. |
| Net Realization per Case | ₹178.8 | +0.5% YoY for the full year; Q4 realization improved +3.4% YoY. |
| Gross Margin | 55.2% | -30 bps YoY; stable despite competitive discounting environment. |
| Net Debt | ₹25.6 crores | Significant reduction from QIP proceeds; India business is net debt-free. |
| Capital Expenditure | ₹4,500 crores | Includes 4 new greenfield plants in India and international expansions. |
Geographic & Segment Commentary
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India: Domestic volumes grew 10.5% in Q4 despite an overall challenging year marked by unprecedented rainfall during peak season. Management focused on upsizing packs (250ml to 400ml) to maintain market share against competition, resulting in a volume-value gap. Four new greenfield plants (Prayagraj, Buxar, Damtal, and Mendipathar) were commissioned and are ready for the CY2026 season.
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International Markets: Volume grew 10% in Q4, led by strong performance in South Africa and Zimbabwe. The segment benefited from favorable currency movements and the ramp-up of snack manufacturing in Morocco and Zimbabwe. Strategic focus remains on Africa with the acquisition of Twizza to expand manufacturing footprint by 70-80% in South Africa.
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Snacks Business: Generated ~₹340 crores in revenue in CY2025. Production recently commenced in Morocco and Zimbabwe (December), with management expecting a significant ramp-up in CY2026 as these facilities reach full-year utilization.
Company-Specific & Strategic Commentary
- Acquisition & Expansion: Announced the acquisition of Twizza in South Africa to enhance route-to-market and backward integration. In addition, the company entered an agreement to manufacture Carlsberg beer in Africa, with a greenfield brewery expected by late CY2026.
- Product Portfolio Mix: Low-sugar and no-sugar products now account for ~59% of consolidated volumes. New product launches planned for CY2026 include “Nimbooz Jeera” and a mid-priced energy drink, “Ad Rush,” to fill category white spaces.
- Operational Leverage: Management noted that CY2025 costs included the stabilization of four new plants without the benefit of peak-season volumes; these facilities provide 40-45% additional capacity for the upcoming season.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Volume Growth | Double-digit (India) | Management maintains a double-digit growth target for CY2026 assuming normal weather. |
| EBITDA Margin | 22% - 23% (Consolidated) | Management intends to sustain current high margins through operating leverage and backward integration. |
| International Margins | Convergence with India | Expected to inch closer to India’s 26% margin profile over the next 2 years via scale and integration. |
| Capex | Low / Moderate (CY2026) | No major greenfield plants in India; focus shifts to Twizza integration and the Africa brewery. |
Risks & Constraints
| Risk | Context |
|---|---|
| Weather Volatility | Heavy rainfall during Q2/Q3 CY2025 severely impacted volumes; the business remains highly sensitive to seasonal climate variations. |
| Competitive Intensity | Increased discounting by competitors in Q4 led to a 4.5% gap between India volume (10.5%) and value growth (~6%). |
| Regulatory / Labor | Implementation of 4 new labor codes resulted in a ₹14 crore incremental cost impact recognized in Q4. |
Q&A Highlights
Pricing & Realization
- Question: Why did India sales growth (6%) lag volume growth (10.5%) in Q4? (Abneesh Roy)
- Answer: Primarily due to competitive discounting in the off-season and strategic upsizing of 250ml packs to 400ml to drive volume (Raj Gandhi/Ravi Jaipuria).
South Africa Strategy
- Question: What is the impact of the Twizza acquisition? (Rajit Aggarwal)
- Answer: It adds 70-80% capacity, reduces freight via 8 manufacturing locations (up from 5), and is margin accretive due to owned solar power and distribution fleets (Raj Gandhi).
New Categories
- Question: What are the plans for the alcoholic beverage segment? (Onkar Ghugardare)
- Answer: We are starting specifically with Carlsberg in Africa with one greenfield plant; there are currently no plans for alcohol in India (Ravi Jaipuria).
Innovation & Distribution
- Question: Will the ₹10 price point be rolled out pan-India? (Latika Chopra)
- Answer: No, it will be “surgical” and restricted to specific regions like West Bengal and Northeast, likely staying below 5-7% of the total portfolio (Varun Jaipuria).
Key Takeaway
Varun Beverages delivered a resilient CY2025, with PAT growing 16.2% to ₹3,062.04 crores despite “the worst season” of rain-impacted volumes in India. The company effectively utilized soft periods to commission four new domestic plants and expand its international footprint via the Twizza acquisition and entry into the African beer market with Carlsberg. While competitive discounting and pack upsizing created a temporary volume-value gap in Q4, the India business remains net debt-free with 40-45% surplus capacity ready for the CY2026 peak season. Strategic focus remains on high-growth categories like energy drinks (Ad Rush) and snacks (up to $100m revenue target). Management maintains a confident outlook for double-digit volume growth and margin stability, provided weather conditions normalize in the coming summer.
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