Varun Beverages Q1 misses estimates, says Campa isn't hurting growth
Varun Beverages Ltd sought to reassure investors on Tuesday that its India business continues to grow at more than 20% despite intensifying competition from Reliance
Varun Beverages Ltd sought to reassure investors on Tuesday that its India business continues to grow at more than 20% despite intensifying competition from Reliance Consumer Products Ltd's Campa Cola, after a weaker-than-expected June quarter and margin pressure rattled investor sentiment. The PepsiCo Inc. bottler reported consolidated revenue from operations of ā¹8,650.6 crore for the April-June quarter (Q1FY27), up 20.8% from a year earlier but below the Bloomberg consensus estimate of ā¹8,675.9 crore, based on 15 analyst estimates. Consolidated net profit rose 15.1% to ā¹1,525.4 crore, also missing the Bloomberg consensus estimate of ā¹1,533.6 crore from 14 analysts. The earnings miss, together with margin pressure from the integration of South African beverage maker Twizza and higher input costs, pushed the stock down 7.53% to close at ā¹429.50 on the Stock Exchange on Tuesday. Quick answers to key questions ā¢ 5 QUESTIONS 1 What were Varun Beverages' revenue and profit figures for Q1 FY27? āµ Varun Beverages reported a consolidated revenue of ā¹8,650.6 crore and a net profit of ā¹1,525.4 crore for Q1 FY27. 2 Why did Varun Beverages' stock price fall after their Q1 earnings announcement? āµ The stock price fell by 7.53% due to earnings misses and margin pressures from the acquisition of Twizza and higher input costs. 3 How is Varun Beverages responding to competition from Campa Cola?
āµ Varun Beverages is focusing on maintaining profitable growth by offering larger pack sizes and emphasizing non-competitive price segments, rather than chasing lower-end products. 4 Should investors be concerned about Varun Beverages' recent earnings performance? āµ While concerns arose from the earnings miss and margin compression, Varun emphasizes ongoing growth, maintaining over 20% growth rates in their core markets. 5 What new product categories is Varun Beverages exploring beyond carbonated soft drinks? āµ Varun Beverages is expanding into hydration drinks, juices, and value-added dairy products, which are growing significantly faster than its traditional beverage offerings. Also Read | FMCG giants race to make India drink beyond summer "We are growing at a healthy 20% plus rate. Even post-June, we are looking at a 20% plus growth, at least minimum," Ravi Jaipuria, chairman, said during the company's post-earnings conference call. Jaipuria said July had maintained that pace after unseasonal rains weighed on beverage consumption in April. Holding the line The comments come as India's carbonated soft drinks market enters its fiercest competitive battle in years. Reliance Consumer has rapidly expanded Campa Cola by reviving the ā¹10 price point, a segment historically dominated by regional beverage makers, and offering larger pack sizes at the same price, prompting incumbents to respond with higher grammage and promotional offers. The aggressive pricing strategy has fuelled concerns that established players may eventually have to sacrifice margins to defend market share.
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