Company Snapshot

Varun Beverages Limited (VBL) is a key player in the global beverage industry with a presence across 15 countries and is the second largest franchisee of PepsiCo in the world (outside the US). The company has 54 state-of-the-art production facilities (38 in India and 16 in international territories).

Financial Performance for Q3 and 9M CY2026

Quarterly Performance (Q3 CY2026 vs. Q3 CY2025)

  • Revenue from Operations: Increased by 33.3% to ₹68,155.86 million from ₹51,124.38 million.
  • Excise Duty: Increased by 37.1% to ₹2,080.28 million from ₹1,517.44 million.
  • Net Revenues: Increased by 33.2% to ₹66,075.6 million from ₹49,606.94 million.
  • Other Income: Decreased by 18.8% to ₹1,198.62 million from ₹1,475.63 million.
  • EBITDA: Increased by 25.1% to ₹14,267.09 million from ₹11,404.08 million.
  • Profit Before Tax (PBT): Increased by 13.5% to ₹10,526.16 million from ₹9,272.29 million.
  • Tax Expense: Increased by 13.4% to ₹2,220.24 million from ₹1,957.19 million.
  • Net Profit After Tax (PAT): Increased by 13.5% to ₹8,305.92 million from ₹7,315.10 million.

Nine-Month Performance (9M CY2026 vs. 9M CY2025)

  • Revenue from Operations: Increased by 23.6% to ₹223,712.41 million from ₹181,011.15 million.
  • Net Revenues: Increased by 23.3% to ₹218,145.52 million from ₹176,891.16 million.
  • EBITDA: Increased by 19.9% to ₹52,745.84 million from ₹44,007.96 million.
  • Net Profit After Tax (PAT): Increased by 15.5% to ₹32,022.98 million from ₹27,721.20 million.

Operational and Volume Metrics

  • Consolidated Sales Volume: Grew by 28.7% to 354.4 million unit cases in Q3 CY2026 from 275.3 million cases in Q3 CY2025.
  • India Volume Growth: 22.5%.
  • International Volume Growth: 39.9% (includes 15.3 million cases from the acquisition of Twizza in South Africa).
  • Product Mix (Q3 CY26): Carbonated Soft Drinks (CSD) constituted 73.3%, Juice-Based Drinks (JBD) 4.8%, and Packaged Drinking Water 21.9%.
  • Low/No Sugar Mix: Increased to ~86% of consolidated sales volumes in 9M CY2026 from 44% in Q3 CY2025.
  • Realization per Case (Beverages): Improved by 2.2% at the consolidated level to ₹177.0 and by 0.5% in India to ₹170.0, supported by growth in high-value categories and premium offerings.

Key Developments and Strategic Updates

1. Incorporation of KIVA Spirits and Company Limited: On August 29, 2026, VBL incorporated a wholly-owned subsidiary in India to explore opportunities in Ready to Drink (RTD), Alcoholic Beverages, and allied products.

2. Exclusive Distribution Agreement with Mondelez: On September 24, 2026, Varun Beverages (Zimbabwe) (Pvt) Ltd. entered into an agreement with Mondelez South Africa for the exclusive distribution of its chocolate, biscuit, candy, and gum products in Zimbabwe, effective October 1, 2026.

3. Completion of Merger in South Africa: The merger of Twizza with its holding company, Bevco, was completed with effect from August 1, 2026. Significant operational synergies are expected in the coming quarters.

4. Commencement of Kenya Operations: The company started beverage operations in Kenya during the quarter and introduced two new brands, 'BOLT UP' and 'XTREME FIZZ'.

5. Business Combination Accounting: The acquisition of business from Devyani Food Industries (Kenya) Ltd. by VBL Industries (Kenya) Ltd. for USD 32 million (₹3,050 million) effective August 1, 2026, was accounted for as a business combination under common control. Comparative financials have been restated accordingly.

Dividend Declaration

In line with the company's dividend policy, the Board of Directors approved an interim dividend of 25% of the face value, i.e., ₹0.50 per share. This will result in a total cash outflow of approximately ₹1,691 million.

Margin Analysis and Cost Pressures

  • Gross Margin: Declined by 334 basis points to 53.1% in Q3 CY2026, primarily due to a ~300 bps impact from increased packaging costs (preforms, shrink film, closures, cans) caused by geopolitical issues.
  • India Non-Beverage Sales: A 104.3% increase in the sale of non-beverage products (like preforms and caps), which have a higher COGS, impacted India's gross margins by ~100 bps.
  • Sugar Prices: A ~16% increase in sugar prices was largely offset by a shift in the product mix towards low/no sugar products.
  • EBITDA Margin: Declined by 140 bps to 21.6% in Q3 CY2026, as gross margin contraction was partially offset by operational leverage from strong volume growth.
  • Cost Increases: Depreciation and finance costs increased by 34.5% and 53.5% YoY, respectively, primarily due to the acquisition of Twizza and associated debt funding.

Management Commentary

Mr. Varun Jaipuria, Executive Vice Chairman, cited strong volume growth, expanded distribution, and premium product launches as key drivers. He highlighted the company's focus on growth in existing markets, measured diversification into adjacent categories, and maintaining profitability and long-term value creation.

Disclaimer and Notes

The presentation includes forward-looking statements subject to risks and uncertainties. Previous period numbers have been restated for the business combination in Kenya under common control, as required by Ind AS 103.