Varun Beverages Q1 FY23 Result Updates.
Two-fold jump in revenue; PAT at Rs 802 cr
Varun Beverages, PepsiCo’s largest franchise bottler, reported a net profit of Rs. 802 crores, jumped by 151.6% YoY from 318.8 crores driven by high growth in revenue from operations, and improvement in margins, and transition to a lower tax rate in India.
Despite the inflationary raw material environment, the company witnessed a limited impact on the gross margins during the quarter because of the early stocking of key raw materials and improvement in realizations. Gross margins for the quarter reduced by 302 bps to 50.5% from 53.5% in Q1 FY22 primarily because of an increase in preform prices by 30% over Q1 FY2022.
EBITDA (earnings before interest, tax. depreciation, and amortization) increased by 119.1% to Rs. 12,50.6 crores, and EBITDA margin improved by 194 bps to 25.2% in Q2 CY2022 led by the higher realization and operating leverage from increased sales volume.
Robust volume growth to increase revenue.
Net Revenue from operations grew by 102.3% YoY to Rs. 49,54.8 crores primarily because of robust volume growth (increased by 96.9% to reach 30 crores cases) and improvement in net realization (increased by 2.7% to Rs. 165). The company’s continued efforts towards expanding the distribution network (3 mn+ outlets) and return of strong demand across the markets after two years of pandemic-related disruptions during the peak season led to robust sales volume growth.
Realization per case improved by 2.7% to Rs. 165 per case driven by price hikes in select SKUs, reduction in discounts/incentives, and improvement in the mix. CSD constituted 73%, JBD 9%, and Packaged Drinking Water 18% in Q1 FY23. Sales volumes in India grew by 106.4% in Q1 FY2023 to 26.2 crores cases and in International markets grew by 49.2% to 3.8 crores cases.
Depreciation increased by 18.9% on account of capitalization of assets and Finance costs remained flat.
Total expenses were at Rs 3,966.42 crore as compared to Rs 2,087.79 crore.
On 1st August the stock closed at Rs. 926.10, down by 0.10%.
The return on equity (ROE) is 18.6% for the quarter ended June 2022. The price-to-earning (P/E) ratio stood at 46.4. The return on capital employed (ROCE) for the company is 17.4%. The price to book value of Varun Beverages Ltd is 12.5. The EV/EBITDA is 24.5.