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- 02 Aug 2022
- ICICIdirect Research
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VARUN BEVERAGE POSTS Q1FY23 NUMBERS
VBL - 613 Change: -15.45 (-2.46 %)News: Revenue witnessed a growth of 102.3% to Rs 4954.8 crore led by 96.9%. The company sold 300 million cases during the quarter, which include 73% of the cases of carbonated soft drinks, 18% cases of water & 9% of the cases of Juices. On a three year CAGR basis, sales & operating profit growth was 20.8% & 16.7% respectively. Sales volume in India increased by 106.4% to 262 million cases & international territories saw 49.2% jump in volumes to 38 million cases. Gross margin contracted by 302 bps. Employee & overhead spends were down by 366 bps & 130 bps. Operating profit grew by 119% to Rs1250.6 crore & operating margin seen a uptick of 194 bps to 25.2%. Net profit witnessed a growth of 119.1% to Rs802 crore. Net debt dipped by Rs950 crore to Rs2055.5 crore. Net working capital reduced from 24 days in June 2021 to 17 days in June 2022. In H1CY22, capex included Rs670 crore primarily setting up of new greenfield production facility in Bihar, Jammu & brownfield expansion at Sandia facility.
Views: Varun beverage witnessed splendid volume growth during the quarter largely backed by low base, extreme summer & potential growth in acquired southern and western territories (acquired 3 years back). With the 90% utilisation of its capacity, the company was able to reach volume of 300 million cases during the quarter. Though, high commodity inflation adversely impacted gross margins, the company was still able to off-set the cost with early procurement of PET inventories. We believe the company has been able to drive the potential of underpenetrated territories of Bihar & some of the acquired territories in South India. With this kind of growth, we would be upgrading our volume numbers. With the expected dip in crude based packaging costs (PET chip prices), the margins improvement is also expected in H1CY23. We remain positive on Varun beverages.
Impact: Positive.