Varun Beverages stock split, dividend & Q2 results announcements today; earnings preview

The board of Varun Beverages Ltd (VBL) will be considering proposals of stock split and interim dividend, along with its June quarter results later today. The bottler of PepsiCo, which follows calendar as financial year, is expected to report 25-43 per cent year-on-year (YoY) rise in net profit for the quarter on up to 25-35 per cent jump in sales.

Sharekhan expects VBL to log 25.9 per cent YoY rise in profit at Rs 1,265 crore compared with Rs 1,005 crore in the same quarter last year. This, it said, would be in line with 27 per cent YoY growth in the operating profit.

The brokerage sees a 24.6 per cent increase in sales for VBL at Rs 6,992 crore for the June quarter against Rs 5,611 crore YoY, driven by 21 per cent YoY volume growth and 3 per cent growth in realisations. Softening of raw material prices would aid a 150 basis points YoY expansion in gross margin but higher other expenses would limit operating profit margin expansion to 30 bps YoY, it said. OPM is seen at 27.2 per cent.

MOFSL sees 43.2 per cent YoY rise in VBL's profit at Rs 1,422.60 crore on 35.30 per cent YoY rise in sales at Rs 7,594 crore. This brokerage expects overall sales volume for Varun Beverages to grow 35 per cent YoY and Ebitda margin to improve to 27.8 per cent from 26.9 per cent YoY. The integration and ramp-up of BevCo will be in focus. Scale-up in international geographies and further capex update are the key monitorables, it said.

Kotak Institutional Equities, which sees a profit figure at Rs 1,350 crore, up 35.9 per cent YoY, estimates 27.3 per cent YoY growth in volumes at 401 million cases. The growth will be led by a 22 per cent YoY rise in domestic volumes, driven by undisrupted summer and heat waves across the country, along with other structural growth drivers such as share gains in under-penetrated areas, distribution expansion, sustained momentum in high-growth portfolio.

Kotak also sees 60 per cent YoY growth (8 per cent organic) in International volumes led by addition of South Africa (Bevco acquisition). Overall, the organic volume growth for VBL is expected at 19 per cent YoY.

"We build 39 per cent YoY growth in realization (6 per cent in India led by product/SKU mix and about 2 per cent decline in international owing to South Africa consolidation) Net-net, we estimate 32 per cent YoY growth in consolidated revenues. We model slight increase in GM on YoY basis to 53 per cent. We expect Ebitda margin at 28.7 per cent (up 180/580 bps YoY/QoQ) led by strong operating leverage," it said.

Varun Beverages shares are up 5 per cent in the past one month and 36 per cent in 2024 so far.