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

Varun Beverages Limited has expanded its operational footprint in Zimbabwe through the incorporation of a new joint venture entity. The company’s subsidiary, Varun Beverages (Zimbabwe) (Private) Limited, registered Varun Beverages Holding (Zimbabwe) (Private) Limited on August 3, 2026. This move establishes a dedicated holding and investment structure within the country, facilitating future strategic initiatives under a consolidated umbrella. The disclosure was made pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The new entity is classified as a holding/investment company, indicating its primary role will be to manage assets or stakes rather than engage directly in manufacturing or distribution at this stage. The incorporation requires no specific governmental or regulatory approvals beyond standard registration processes, as noted in the filing. The transaction was executed via cash consideration, aligning with standard corporate structuring practices for new market entries.

Capital Structure and Shareholding

The financial framework of the new joint venture reflects an initial setup phase with modest capitalization. The authorized share capital stands at USD 500,000, divided into 500,000 shares with a face value of USD 1 per share. Currently, the paid-up share capital is USD 1,000, comprising 1,000 shares subscribed at the face value of USD 1 per share. This lean initial capitalization suggests the entity is being established to prepare for subsequent investments or acquisitions rather than immediate large-scale capital deployment.

Joint Venture Partnership

The ownership structure of Varun Beverages Holding (Zimbabwe) (Private) Limited is split between two entities. Varun Beverages (Zimbabwe) (Private) Limited, which is itself a subsidiary of Varun Beverages Limited, holds a controlling 70% stake. The remaining 30% is held by Mega Market Private Limited. This partnership likely leverages local market expertise or distribution networks provided by Mega Market, while Varun Beverages retains majority control over strategic decisions. The collaboration underscores Varun Beverages’ continued focus on strengthening its presence in Southern Africa, a key growth region for the beverage major.

What the Numbers Show

The establishment of a separate holding entity signals a strategic shift towards modular expansion in Zimbabwe. By creating a distinct legal vehicle with a 70-30 ownership split, Varun Beverages isolates risk and potentially simplifies future equity raises or asset transfers within the region. The minimal paid-up capital of USD 1,000 against an authorized limit of USD 500,000 indicates that the immediate financial outlay is negligible, preserving cash flow for operational needs while keeping the option open to scale capital requirements rapidly if needed. This structure allows the company to aggregate future investments or subsidiaries under one roof without diluting its core Indian operations' balance sheet directly.