Varun Beverages has seen its Environmental, Social, and Governance (ESG) Rating improve to 63 for the fiscal year 2026 (FY26), marking a steady enhancement in its sustainability credentials. The rating was assigned voluntarily by NSE Sustainability Ratings & Analytics Limited, with confirmation received by the company on August 11, 2026. This upward revision from a score of 62 in FY25 signals continued progress in the company’s adherence to global sustainability standards, which is increasingly critical for investor confidence and regulatory compliance in the consumer goods sector.

The disclosure was made pursuant to Regulation 30 read with Para A of Part A of Schedule III of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Additionally, the filing references SEBI Master Circular No. HO/49/14/14(7)2025-CFD-POD2/I/3762/2026 dated January 30, 2026. The notice was signed by Ravi Batra, Chief Risk Officer & Group Company Secretary, and submitted to both the National Stock Exchange of India Ltd. and BSE Limited.

ESG Rating Progression

The following table outlines the year-over-year change in Varun Beverages’ ESG Rating as assessed by NSE Sustainability Ratings & Analytics Limited:

The one-point increase indicates incremental improvements in the company’s environmental stewardship, social responsibility initiatives, or governance frameworks over the past year. While the absolute score remains moderate, the positive trajectory aligns with broader industry trends where beverage companies are under growing pressure to demonstrate sustainable water usage, carbon footprint reduction, and ethical supply chain practices.

Regulatory and Corporate Governance Context

The assignment of this rating is voluntary, distinguishing it from mandatory compliance filings. However, by disclosing it under Regulation 30 of the SEBI LODR Regulations, Varun Beverages ensures transparency for its stakeholders. The rating details have been uploaded to the company’s official website at www.varunbeverages.com for public access. This proactive disclosure supports the company’s governance framework, overseen by its Board of Directors, in maintaining high standards of corporate accountability.

Varun Beverages reported a consolidated net profit of ₹15,253.55 million for the quarter ended June 30, 2026 (Q2CY26), marking a 15.1% year-on-year increase from ₹13,254.88 million in Q2CY25. The growth was primarily fueled by a 19.8% rise in consolidated sales volumes to 466.7 million unit cases, alongside a 20.4% increase in net revenue from operations to ₹84,512.32 million. For the first half of CY26 (H1CY26), net profit grew 16.9% year-on-year to ₹24,040.7 million, while revenue expanded 19.4% to ₹150,254.2 million. On July 28, 2026, the Board of Directors approved these unaudited financial results and declared a second interim dividend of ₹0.50 per equity share for the financial year 2026.

The dividend payment is scheduled for August 4, 2026, for shareholders recorded in the Register of Members or depository records as of August 1, 2026. The total cash outflow for the dividend is approximately ₹1,691 million. The financial results were reviewed by the Audit, Risk Management and Ethics Committee and approved by the Board under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Joint statutory auditors O P Bagla & Co. LLP and J C Bhalla & Co. issued a limited review report with an unmodified opinion on the consolidated and standalone results.

Key Financial Highlights

The company's financial metrics for Q2CY26 demonstrate robust top-line growth and operational efficiency, despite slight margin compression due to the consolidation of lower-margin international acquisitions.

Note: Figures are in millions unless specified otherwise.

Operational and Strategic Developments

Varun Beverages executed several strategic initiatives during the period. In South Africa, its subsidiary The Beverage Company Proprietary Limited (Bevco) acquired 100% stake in Twizza Proprietary Limited for an enterprise value of ZAR 2,053 million (₹11,398 million). Subsequently, Bevco entered into a binding agreement to acquire Crickley Dairy Proprietary Limited for ZAR 238 million (₹1,314.68 million), subject to regulatory approvals. Additionally, Varun Beverages Industries (Kenya) Limited entered into a Business Transfer Agreement to acquire the business of Devyani Food Industries (Kenya) Limited for USD 32 million (₹3,050 million), aiming to expand its carbonated soft drinks and energy drinks presence in Kenya.

In India, the company extended its Exclusive Bottling Appointment (EBA) with PepsiCo Inc. until April 30, 2049, removing previous restrictions on acting solely as a special purpose vehicle. This revision, signed on May 21, 2026, provides greater operational flexibility. Furthermore, Varun Beverages formed a business alliance with Asahi Group Holdings on June 18, 2026, to commercialize the CALPIS brand in India through a franchise arrangement, entering the value-added fermented dairy beverage category.

What the Numbers Show

The divergence between revenue growth (20.4%) and net profit growth (15.1%) indicates that while top-line expansion is accelerating, cost structures are absorbing some of the gains. EBITDA margins declined by 76 basis points to 27.7% in Q2CY26, primarily due to the consolidation of the Twizza business in South Africa, which currently operates at lower margins. However, gross margins improved by 44 basis points to 55.0%, supported by a higher mix of international business and savings in sugar consumption in India due to a higher mix of low-sugar/no-sugar products, which now constitute ~73% of consolidated sales volumes. The significant increase in depreciation (33.6% YoY) and finance costs (55.8% YoY) reflects the impact of new plant commissioning in India and the Twizza acquisition, respectively.

During the earnings call, management highlighted that value-added dairy (VAD) is growing at over 40% and Nimbooz at more than 30%, significantly outpacing overall business growth. Chairman Ravi Jaipuria noted that while the industry is growing at ~20%, Varun Beverages is maintaining high double-digit growth in India despite weather-related disruptions in April. He emphasized that the company is not scaling up the non-profitable ₹10 price point significantly, focusing instead on profitable growth in the ₹20+ segment. Regarding margins, Jaipuria stated confidence in maintaining current levels even in worst-case geopolitical scenarios, with potential for improvement once cost pressures subside.

Management Guidance and Outlook

Management expressed confidence in the company's ability to deliver sustained and profitable growth, leveraging adequate capacities, strong partnerships, and its extensive distribution network across markets. The following table summarizes key guidance points from the conference call:

Source: https://lodr-files.dhan.co/lodr-inputs/Company/INE200M01039/caca7af2-8ab1-4d94-99ec-fa0259c4706a.pdf