Varun Beverages Q3 net profit rises 13% YoY, but margins fall

Varun Beverages, PepsiCo's second-largest franchise bottler globally, witnessed a 13.5% year-on-year rise in consolidated net profit to ₹830.6 crore in the July-September 2026 quarter. However, the company's shares declined 4.39% to ₹396.5, following a dip in operating margins. Revenue from operations grew by 33.3% to ₹6,815.6 crore, driven by double-digit volume growth in India and international markets. Standalone revenue from operations reached ₹3,822.4 crore, up 24.75% year-over-year.

Despite the profit increase, the bottler reported a 33.4 basis point decline in gross margin to 53.1%, primarily due to higher packaging material costs, particularly for shrink films and cans. These cost increases were a result of geopolitical disruptions. The company acknowledged a surge in sugar prices, which were counterbalanced by an increased production of low-sugar and sugar-free products, rising from 44% in Q3 CY2025 to 88% in the July-September 2026 quarter.

Consolidated sales volume expanded by 28.7% to 354.4 million cases, compared to 275.3 million cases in the same quarter a year earlier. The growth was attributed to robust volume growth of 22.5% in India and 39.9% in international markets. On October 14, Nestle India also reported a 36% year-on-year increase in standalone net profit, but its shares dropped 7.76% after the company highlighted food inflation and commodity cost pressures as key concerns.

Earlier this year, Varun Beverages extended its exclusive bottling and trademark license agreement with PepsiCo until April 30, 2049, replacing the previous agreement which had been valid until April 30, 2039.