Ravi Jaipuria-Led Beverage Giant Reports 20% Revenue Growth; Board Declares Interim Dividend and Extends PepsiCo Pact

On Tuesday, Indian equity benchmark indices traded marginally lower, with the benchmark Nifty 50 index declining 6.35 points, or 0.03 per cent, to 23,989.60. Despite reporting strong quarterly earnings and announcing multiple strategic developments, Varun Beverages (VBL) share price declined 7.40 per cent to Rs 430.15.

Varun Beverages Q2 CY2026 Financial Performance

On a consolidated basis, revenue from operations increased 20.4 per cent YoY to Rs 8,451.23 crore in Q2 CY2026 from Rs 7,017.37 crore in the corresponding quarter last year. Consolidated sales volumes grew 19.8 per cent YoY to 466.7 million cases, supported by 14.4 per cent volume growth in India and 38.4 per cent growth across international markets.

EBITDA rose 17.2 per cent YoY to Rs 2,343.04 crore from Rs 1,998.77 crore, while Profit After Tax (PAT) increased 15.1 per cent YoY to Rs 1,525.36 crore from Rs 1,325.49 crore. Gross margin improved by 44 basis points to 55.0 per cent, although EBITDA margin moderated to 27.7 per cent due to the consolidation of the newly acquired Twizza business in South Africa, which currently operates at lower margins.

For the first half of CY2026, revenue increased 19.4 per cent YoY to Rs 15,025.42 crore, EBITDA rose 18.7 per cent YoY to Rs 3,871.96 crore, while PAT grew 16.9 per cent YoY to Rs 2,404.07 crore.

Board Declares Interim Dividend

The Board of Directors approved an interim dividend of Rs 0.50 per equity share, equivalent to 25 per cent of the face value, in line with the company's dividend policy. The dividend will result in a total cash outflow of approximately Rs 169.1 crore.

PepsiCo Agreement Extended Till 2049

Varun Beverages announced that it has signed a revised Exclusive Bottling Appointment and Trademark Licence Agreement with PepsiCo for India. Under the revised agreement, the exclusive bottling rights have been extended until April 30, 2049, from the earlier expiry of April 30, 2039.

The revised agreement also removes the earlier restriction requiring Varun Beverages to operate solely as a special purpose vehicle (SPV) for PepsiCo's business, providing greater operational flexibility to pursue future growth opportunities and operational synergies.
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International Expansion Continues

During the quarter, the company entered into a franchise agreement with Asahi Group Holdings to introduce and commercialise CALPIS, Japan's iconic fermented milk beverage brand, in India with Original and Mango variants.

Varun Beverages also signed an agreement through its wholly owned Kenyan subsidiary to acquire the business of Devyani Food Industries (Kenya) Limited for USD 32 million. The acquisition is expected to strengthen the company's route-to-market network and expand its presence in carbonated soft drinks, energy drinks, juices and value-added dairy products across Kenya. The company also benefited from the integration of Twizza in South Africa, which strengthened its manufacturing footprint and distribution capabilities in the region.

Management Commentary

Commenting on the performance, Ravi Jaipuria, Chairman of Varun Beverages Limited, said: "We are pleased to report a strong performance during this quarter across our markets. Consolidated sales volumes grew by 19.8% and, together with improved realizations, translated into a 20.4% increase in net revenue from operations. EBITDA increased by 17.2% to Rs. 23,430.4 million in Q2 CY2026.

We also extended our exclusive bottling and trademark licence agreement with PepsiCo in India until April 2049, strengthening our long-term partnership and creating greater operational flexibility. We entered a strategic alliance with Asahi Group Holdings to introduce the iconic CALPIS brand in India and also signed an agreement to acquire the business of Devyani Food Industries (Kenya) Limited, strengthening our international presence.

Looking ahead, we remain confident in the long-term growth potential across our markets, supported by favourable demographics, rising disposable incomes and increasing consumption of packaged beverages."

About Varun Beverages

Varun Beverages Ltd is one of the world's largest franchisees of PepsiCo outside the United States. The company manufactures and distributes a wide portfolio of carbonated soft drinks, juices, sports drinks and packaged drinking water under brands including Pepsi, Mountain Dew, Sting, Mirinda, 7UP, Slice, Tropicana, Gatorade and Aquafina.

The company operates across India, Nepal, Sri Lanka, Morocco, Zambia, Zimbabwe, South Africa, Lesotho, Eswatini and the Democratic Republic of Congo, while also holding distribution rights in Namibia, Botswana, Mozambique and Madagascar. India remains its largest market, contributing around 67 per cent of revenue from operations in FY2025.

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Disclaimer: The article is for informational purposes only and not investment advice.