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Informist, Tuesday, Oct. 27, 2026

 

By Gunjan Rajput

 

MUMBAI – Varun Beverages Ltd. is expected to report a modest year-on-year rise in consolidated net profit for the September quarter as higher raw material costs and pressure on margins may affect its profitability, according to brokerages tacking the company. However, the company's revenue is likely to rise owing to strong volume growth in India and international markets.

 

The company's consolidated net profit is estimated to rise over 7% year-on-year to INR 7.96 billion while the revenue is seen increasing over 24% on year to INR 60.85 billion, according to estimates from 13 brokerages. Sequentially, the top line is seen declining 28% and the bottom line is expected to fall nearly 48%.

 

The highest estimate for the company's net profit is INR 8.52 billion from Emkay Global Financial Services Ltd. and the lowest is INR 6.73 billion from Antique Stock Broking Ltd. The highest revenue estimate is INR 62.39 billion from Kotak Securities Ltd. and the lowest is INR 59.29 billion from YES Securities (India) Ltd.

 

Domestic volumes are expected to remain the key growth driver for the September quarter, supported by favourable weather conditions and an extended summer. The India volumes are expected to rise 18-20% year on year, according to brokerages. "India realisation is expected to remain broadly flat, as the impact of upsizing the Rs20 (INR 20) pack to 400 ml from 250 ml is offset by premiumization, lower discounting, and GST 2.0 benefits," Kotak Securities said in its report. The demand in India improved in September compared with the preceding quarter, when demand was affected by 15 days of weak sales in April, Nuvama Wealth Management Ltd. said in its report.

 

The company's operations in international markets are also expected to support the top-line growth. Brokerages expect an international volume growth of 15-21% year-on-year. International realisations to increase 6-7% on year, supported by rupee depreciation and an improving product mix in South Africa, partly offset by the consolidation of Twizza, which has lower net realisations, according to Kotak Securities.

 

Varun Beverages' earnings before interest, taxes, depreciation, and amortisation are expected to rise 21% on year to INR 13.89 billion, according to 11 brokerage estimates. The highest estimate for EBIDTA is INR 14.38 billion from Nuvama Wealth Management, while the lowest is INR 13.06 billion from Antique Stock Broking. The net profit growth is expected to lag revenue and EBITDA growth, partly reflecting the pressure on margins and higher depreciation following the consolidation of Twizza, according to Kotak Securities.

 

Gross margins are expected to contract due to crude and sugar inflation. Nuvama Wealth Management expects the company's consolidated gross margin to decline 272 basis points on year to 54% and Kotak Securities estimates a 225-bps contraction to 54.5%. Kotak Securities expects the impact of raw material inflation to be partly offset by the shift of a majority of the domestic carbonated soft drinks portfolio to lower-sugar variants from the June quarter. The sugar content in Mountain Dew was reduced by 40-50%, the brokerage said. The company had posted a gross margin of 56.7% in the September quarter of the calendar year 2025.

 

The company's consolidated EBITDA margin is expected to remain around 23.0-23.5%, with some brokerages forecasting a decline. Kotak Securities expects the margin to fall 45 bps  on year to 23% and Asit C. Mehta Financial Services Ltd. estimates a 38-bps contraction to 23.1%. Nuvama Wealth Management expects the EBITDA margin to remain flat at 23.5%. "Consolidated EBITDA margin to see some compression due to increasing salience of international business," JM Financial Institutional Securities Ltd. said in its report. The company had posted an EBITDA margin of 23.4% in the September quarter of the calendar year 2025.

 

Varun Beverages is one of PepsiCo Inc.'s largest franchise bottlers and manufactures and distributes beverages under brands like Pepsi, Mountain Dew, and 7UP.

 

Varun Beverages is scheduled to announce its September-quarter results on Friday. At 1003 IST, shares of the company traded at INR 410.10 on the National Stock Exchange, up 0.6%. The stock is down nearly 5% since the company reported its June quarter results.

 

Of the nine brokerage reports on the company available with Informist, eight have a "buy" call on the stock with an average target price of INR 547. This is over 34% higher than the current market price. One brokerage has a "hold" recommendation on the stock with a target price of INR 450.

 

Following are the September quarter earnings estimates for Varun Beverages from 13 brokerages, in the descending order of net profit estimates, in INR billion:
 

Brokerage	Net sales	Net profit	EBITDA
Emkay Global Financial Services Ltd.	61.72	8.52	13.91
Kotak Securities Ltd.	62.39	8.35	14.33
Elara Securities (India) Pvt. Ltd.	61.98	8.31	14.23
Motilal Oswal Financial Services Ltd.	60.61	8.28	13.95
Mirae Asset Sharekhan Ltd.	60.76	8.16
Nuvama Wealth Management Ltd.	61.21	8.12	14.38
Asit C. Mehta Financial Services Ltd.	60.44	8.09	13.94
Choice Equity Broking Pvt. Ltd.	59.99	8.08	14.02
YES Securities (India) Ltd.	59.29	8.03	13.34
JM Financial Institutional Securities Pvt. Ltd.	62.32	7.91	13.83
Axis Securities Ltd.	59.93	7.80	13.82
360 ONE Capital Market Pvt Ltd.	60.67	7.10
Antique Stock Broking Ltd.	59.75	6.73	13.06
Average	60.85	7.96	13.89

 

End

 

Edited by Biswadip Mitra

 

 

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