Shares of Varun Beverages fell 4.39% to hit an intraday low of ₹396.55 on Friday following the company's Q3 results announcement, with the stock trading at ₹402.25, down 3.03% from the previous close at 1:34 pm. According to The Economic Times, the market reaction reflects investor concerns over margin pressures despite strong volume growth and revenue expansion. The stock was trading close to its 52-week low of ₹381, and is down 18.2% so far this year, underperforming the Nifty 50 which has fallen 11.7% during the same period. The company's market capitalisation stood at ₹1.36 lakh crore.
Varun Beverages, one of the largest global franchisees of PepsiCo outside the United States, delivered robust financial results for the third quarter of CY2026. The company reported a consolidated net profit of ₹830.6 crore, representing a growth of 13.54% from ₹731.51 crore in the year-ago period. According to the latest regulatory filing, revenue from operations rose 33.3% YoY to ₹6,815.58 crore from ₹5,112.43 crore in the year-ago quarter. EBITDA increased 25.1% to ₹1,426.71 crore compared with ₹1,140.41 crore a year earlier, though EBITDA margin contracted by 140 basis points to 21.6% from 23% in the corresponding quarter last year. The margin compression was primarily attributed to higher packaging material costs, including preforms, shrink films, closures, and cans, driven by geopolitical disruptions. As per The Economic Times, operating leverage from strong volume growth across India and international markets partially offset the margin pressure.
Consolidated sales volume grew by 28.7% to 354.4 million cases in Q3 CY2026 from 275.3 million cases in Q3 CY2025, driven by robust volume growth of 22.5% in India and 39.9% in international territories. The international volume figure included 15.3 million cases contributed by Twizza in South Africa. According to latest reports, beverage realization per case improved by 2.2% at the consolidated level, with India realization increasing 0.5% supported by higher contribution from premium categories including Ad Rush and Evervess mixers, along with calibrated discounting and efficient price pack architecture. Carbonated soft drinks accounted for 73.3% of consolidated sales volumes, while packaged drinking water contributed 21.9% and juice-based beverages 4.8%.
Executive Vice Chairman Varun Jaipuria attributed margin pressures to elevated packaging costs that weighed on margins during the quarter, with the company also impacted by higher sales of non-beverage products like preforms, caps, etc. in India, which increased by 104% during the quarter and has a higher COGS, impacting gross margins by about 100 bps in India. As reported by The Economic Times, the company's gross margin declined 334 basis points to 53.1% during the quarter, primarily due to higher packaging material costs. However, sugar prices increased around 16% during the quarter, though this impact was largely offset by a sharp increase in the share of low-sugar and no-sugar products in India, from 44% in Q3 CY2025 to 88% in Q3 CY2026. Depreciation and finance costs rose 34.5% and 53.5% respectively, primarily due to the acquisition of Twizza in South Africa and associated debt funding.
The board of directors approved the payment of third interim dividend of ₹0.50 per share of face value ₹2 each for Financial Year 2026, with the dividend entailing a total cash outflow of approximately ₹169.10 crore. As reported by The Economic Times, the company has fixed Thursday, November 5, 2026, as the Record Date for determining equity shareholder entitlement, with dividend payment scheduled from November 7, 2026. For the nine months ended September 2026, Varun Beverages reported a 23.3% year-on-year increase in net revenue to ₹21,814.55 crore, with EBITDA rising 19.9% to ₹5,274.58 crore and profit after tax increasing 15.5% to ₹3,202.30 crore.
Looking ahead, the company's focus will remain on driving growth across existing markets, supported by recent investments, while selectively pursuing opportunities to broaden business operations. According to The Economic Times, the company is taking measured steps towards diversifying its business into adjacent categories, with the recent incorporation of KIVA Spirits and the Kenya acquisition demonstrating this strategic expansion into ready-to-drink and alcoholic beverages segments. During the September quarter, Varun Beverages commenced beverage operations in Kenya and introduced two new beverage brands, BOLT UP and XTREME FIZZ, strengthening its presence in the fast-growing African market. The company also entered into an exclusive distribution agreement with Mondelez in Zimbabwe, further expanding its product portfolio in the market. With effect from August 1, 2026, the merger of Twizza with BevCo has been completed, with the company expecting to unlock significant operational synergies in the coming quarters.
