Varun Beverages shares fell 7.5% after Q1 results despite a 15.4% YoY rise in net profit and 21% growth in operating revenue. Weak India volume growth, lower EBITDA margins and higher costs raised concerns, although international operations continued to support overall growth.
Varun Beverages Ltd. stocks continued to face downward pressure due to the results posted by the company for the June quarter. Investors were concerned about the low volume growth rates in India and shrinking margins. Varun Beverages Ltd stocks closed 7.5% lower at ₹429.50 on Tuesday after the company announced its quarterly results, taking its loss in 2026 to 13%.
Nevertheless, analysts did not lose hope regarding future growth opportunities for the company and did not give any sell recommendations.
Varun Beverages Q1 Results: Revenue Rises 21%, Profit Grows 15%
Financials of Varun Beverages have been impressive in June Quarter FY2026. Net profit attributable to owners has risen by 15.4% YoY to ₹1,520.79 crore against ₹1,317.02 crore of the same quarter last year.
Income from operations has gone up by 21% YoY to ₹8,650.57 crore against ₹7,163.02 crore last year. EBITDA is up by 17% at ₹2,344 crore, but still, it was less than what was anticipated from the market.
EBITDA margin has come down by 90 basis points to 27.1%, but gross margin has gone up by 44 basis points to 55%. This happened because of a favorable international business mix, raw material stock piling in advance and contribution from low and no-sugar beverages.
India Volume Growth Misses Expectations, International Business Supports Growth
The company had India volume growth of 14.4%, which was lower than market estimates of more than 20%. The company explained that the slower growth was due to the weather disruption in April, but volume growth of over 20% continued for the other months following the onset of the season in March.
International business continued to be a significant source of growth, owing to the gains made through the Twizza acquisition in South Africa. There was a 1.2% improvement in beverage realizations, which was driven by better pricing overseas.
According to Ravi Jaipuria, the Chairman of the company, there is confidence in the sustainability of growth going forward.
Why Varun Beverages Shares Fell After Q1 Results?
Despite good earnings and profits growth, Varun Beverages stocks witnessed a dip because of worries about margin squeeze and rising costs. The EBITDA margin decreased to 27.7% from 28.46% last year as a result of integration of Twizza, whose operating margins have not yet been improved.
This move increased the depreciation and finance costs as well. Depreciation expenses were up 33.6%, mainly driven by commissioning of new plants in India and the Twizza acquisition, whereas the finance costs increased by 55.8% in the quarter.
But the operations in India witnessed an improvement, as the EBITDA margins in India improved by 38 basis points on account of efficiencies resulting from higher volumes.
