Varun Beverages Ltd — May2026 Conference Call Summary

Varun Beverages Limited Q1 CY2026 Earnings Conference Call (April 27, 2026)

(VBL follows calendar year; Q1 CY2026 = January-March 2026)

Q1 CY2026 Financial Performance

• Consolidated sales volume: 363.4 million cases (+16.3% YoY; India +14.4%; International +21.4%)
• Revenue: INR 65,742 million (+18.1% YoY)
• Gross margins: 55.2% (+62 bps; early raw material stocking benefit)
• EBITDA: INR 15,289 million (+21% YoY); EBITDA margin: 23.3% (+55 bps)
• India EBITDA margin: +112 bps
• PAT: INR 8,787 million (+20.1% YoY)
• Depreciation: +30.9% (4 new plants: Buxar, Prayagraj, Damtal, Meghalaya)
• Finance cost: +18% (Twizza acquisition debt in South Africa)
• Interim dividend: INR 0.50/share (25% of face value)

Volume Mix

• CSD: 73.6%; NCB: 7.5%; Packaged drinking water: 18.9%
• Low-sugar/no-sugar: ~63% of consolidated volumes
• Realization consolidated: +1.6% YoY (FX benefit in international)
• India realization: -1.5% YoY (upsizing packs + selective price point launches); better than -4% in Q4 CY25

Products Performing Well

• Ad-Rush (mid-priced energy drink at INR 60): phenomenal; facing can shortage (demand higher than anticipated)
• Sting Classic: launched (cans + PET bottles in April); "initial response is fabulous"
• Nimbooz: growing strongly
• Tropicana PET: +100%+
• Dairy segment: +60-70% growth; ~3x realization vs regular beverages
• Snack foods (Africa): INR 112 crores Q1 CY26 (from INR 52 crores Q1 CY25; +115%)

Geopolitical/Raw Material Management

• PET and packaging: covered for this quarter and partly Q2; early stocking advantage
• Aluminum cans: <2% of volumes; tied up; slightly higher cost
• Sugar India: stable (not gone up); international sugar prices down = benefit abroad
• Transport: minor impact from fuel prices; manageable
• 6 months inventory holding internationally = significant competitive advantage
• Strategy: reduce discounts to absorb costs; no price hike needed currently
• New large plants (1,000 bpm vs old 200 bpm): 5x production with same manpower = significant cost efficiency

Acquisitions (Africa)

• Twizza (South Africa): completed; enterprise value ZAR 2,053M (~INR 1,140 crores paid); last year revenue ~INR 800 crores
• Solves BevCo manufacturing capacity constraint; meaningful synergies expected
• Crickley Dairy (South Africa): SPA signed; EV ZAR 238M; ~INR 160 crores revenue; subject to regulatory approvals
• Combined Twizza + Crickley revenue run rate: ~INR 1,000 crores

India Distribution and Capacity

• 4 million outlets base; adding ~500,000 new outlets in CY26 (~10% growth)
• Industry adding ~1 million chilling equipment/year (VBL + Campa + Coke + individual outlets)
• Sufficient capacity to handle 50% volume growth without adding capacity
• CY26 India capex: < INR 500-600 crores (very low year; only 1 plant)

Long-Term Outlook

• VBL expectation: double-digit India volume growth for next 5-10 years
• Weather: Q2 CY26 (peak season) looking very positive; summer strong
• Plant economics: 3-4 year payback; ~30% RoCE
• Campa growing volumes = market is expanding (more competition = more market)

Dividend

• Interim dividend: INR 0.50/share; total outflow ~INR 1,691 million