Varun Beverages rallied 6.33% to Rs 939.05 after the company's consolidated net profit climbed 151.57% to Rs 802.01 crore in Q2 CY22 from Rs 318.80 crore recorded in Q2 CY21.
The company said that the increase in profit was driven by high growth in revenue from operations and improvement in margins.
Revenue from operations (net of excise / GST) grew by 102% YoY to Rs 4,954.8 crore in the quarter ended 30 June 2022 as against Rs 2,449.84 crore posted in Q2 CY21. The rise in revenue was mainly driven by robust volume growth over last year and higher realization.
Total sales volumes were up 96.9% YoY at 300 million cases in Q2 CY22 as compared to 152 million cases in Q2 CY21, on account of the strong demand during the peak season and return to normalcy.
Realization per case improved by 2.7% to Rs 165 per case in Q2 CY22 driven by price hike in select SKUs, reduction in discounts/incentives, and improvement in mix.
The company's profit before tax stood at Rs 1061.62 crore in Q2 CY22, recording a growth of 152.97% as compared to Rs 419.66 reported in the corresponding quarter previous year.
EBITDA soared 119.1% to Rs 1,250.6 crore in Q2 CY22 from Rs 570.8 crore recorded in Q2 CY21. EBITDA margins improved to 25.2% in Q2 2022, led by higher realization and operating leverage from increased sales volume.
Gross margins for Q2 CY22 reduced by 302 bps to 50.5% from 53.5% in Q2 CY21 primarily because of increase in preform prices by approximately 30% over Q2 CY21.
Net debt stood at Rs 2,055.5 crore as on 30 June 2022 as against Rs 3,005.3 crore as on 31 December 2021. Debt:Equity ratio stood at 0.4x as on 30 June 2022 while Debt:EBITDA (TTM) ratio stood at 0.8x as on 30 June 2022.
During H1 CY22, Varun Beverages' net profit surged 135.7% to Rs 1,073.1 crore on 65.9% jump in revenue from operations (net of excise / GST) to Rs 7,782.3 crore in H1 CY22 over H1 CY21. EBITDA increased by 87.1% to Rs 1,781.6 crore in H1 CY22 from Rs 952.4 crore in H1 CY21.
During H1 CY22, the net capex included approximately Rs 670 crore primarily for setting-up of new greenfield production facilities in Bihar & Jammu and brownfield expansion at Sandila facility. The net capex includes capitalization of CWIP amounting approximately Rs 500 crore which was outstanding as of December 2021. Capacity utilization in India during the peak month was close to 90% driven by best ever sales volumes. In certain categories (CSD PET, Tropicana / VAD, etc.) reached near full capacity.
Net Working capital days reduced to approximately to 17 days as on 30 June 2022 from 24 days as on 30 June 2021 as the business has returned back to normalcy and most of the raw materials (RM) inventory stocked for the season has been utilized, the company sated.
Meanwhile, the company's board has recommended an interim dividend Rs 2.50 per equity share for the financial year 2022. The firm fixed Friday, 12 August 2022 as the record date for the payment of interim dividend. The interim dividend will be paid on and from Tuesday, 16 August 2022.
Commenting on the performance for Q2 & H1 CY22 Ravi Jaipuria, Chairman, Varun Beverages said, We are pleased to share that we have delivered an all-time high performance during the quarter. Our continuous effort to invest in our business despite the pandemic led disruption of peak season during the last two years and return of normalcy in day-to-day activities translated to robust demand leading to consolidated sales volume growth of 96.9% YoY. In addition, we were able to improve our realization per case by taking price hikes in select SKUs, reduction in discounts/incentives, and improving the mix leading to doubling of our topline during the quarter as compared to last year.
On the profitability front, despite the inflationary raw material environment we witnessed limited impact on our gross margins during the quarter because of early stocking of key raw materials and improvement in realizations. Further, operating leverage due to high volume growth translated into improved EBITDA margins of 25.2%. Healthy cash flows during the period enabled us to significantly reduce our debt thereby strengthening our balance sheet position.
On the demand front, we are seeing enhanced consumption trends across markets. Directionally, we continue to implement strategic initiatives to solidify our market position as a key player in the global beverage industry and are confident of continuing our journey of sustainable value creation for all stakeholders.
Varun Beverages is a key player in beverage industry and one of the largest franchisee of PepsiCo in the world (outside USA). The company produces and distributes a wide range of carbonated soft drinks (CSDs), as well as a large selection of non-carbonated beverages (NCBs), including packaged drinking water sold under trademarks owned by PepsiCo.
As on date, VBL has been granted franchises for various PepsiCo products across 27 States and 7 Union Territories in India. India is the largest market and contributed approximately 75% of revenues from operations (net) in Fiscal 2021. VBL has also been granted the franchise for various PepsiCo products for the territories of Nepal, Sri Lanka, Morocco, Zambia and Zimbabwe.
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