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Explore Varun Beverages’ Q2 CY2025 results — strong EBITDA margins, international growth, and strategic expansions despite domestic headwinds. Is VBL still a good stock to hold?
Description: Varun Beverages (VBL) delivers steady margins in Q2 2025 despite a 3% volume drop. Find out what it means for investors.
📊 Quick Overview: Q2 CY2025 Key Financials (Consolidated)
| Metric | Q2 CY2025 | Q2 CY2024 | YoY Change |
|---|---|---|---|
| Revenue | ₹71,630 Cr | ₹73,337 Cr | 🔻 -2.3% |
| EBITDA | ₹19,988 Cr | ₹19,912 Cr | 🔼 +0.4% |
| EBITDA Margin | 28.5% | 27.7% | 🔼 +82 bps |
| Net Profit | ₹13,255 Cr | ₹12,618 Cr | 🔼 +5.0% |
| EPS | ₹3.89 | ₹3.86 | 📈 Marginal rise |
🌧️ Rainy Season Hits India Volumes — But Margin Holds Strong
- India volumes fell 7.1% due to early monsoon during peak summer.
- Overall sales volume: Down 3% YoY, at 389.7 million unit cases.
- Realization per case improved marginally (+0.5%) thanks to a 6.6% gain in international territories.
🌍 Global Growth + Capex Backed Margins
🔼 What’s Driving VBL’s Resilience?
- Strong Africa business: South Africa led a 15.1% international volume growth.
- 4 new greenfield plants: Commissioned in UP, Bihar, HP, and Meghalaya.
- Diversification into snacks: Commercial production of Cheetos started in Morocco.
- Net Debt Free: ₹5,149 Cr free cash on books; reaffirmed AAA/Stable rating.
- EBITDA Margin of 28.5%: Higher than peers in beverage space.
💼 Strategic Moves This Quarter
- 🏗️ Investment of ₹25,000 Cr+ in H1 CY2025 capex including packaging, snacks, and brownfield expansions.
- 💡 Sustainability focus: Solar SPV in Gorakhpur, EV logistics, and 100% plastic recycling target by 2025.
- 🌐 Acquired 50% stake in Everest Lanka (coolers), supporting backend infrastructure.
⚠️ Investor Watchlist — Things to Track
| Risk Factor | Impact |
|---|---|
| Volume Drop in India | Seasonal or structural? Next quarter is key. |
| New Plants’ Utilization | Will they generate meaningful topline? |
| Flat Revenue Trend | PAT grew, but topline slightly declined. |
| High Expectations | After strong QIP, market expects higher EPS growth. |
🔎 Outlook: Long-Term View Still Positive
Despite temporary volume headwinds, VBL remains a solid bet with:
- 🌐 Geographic diversity (10+ countries)
- 📦 Product mix (CSDs, juices, snacks, coolers)
- 💰 Debt-free growth & CAPEX-backed expansion
- 📊 Consistent margin and profit delivery
➕ Add to Watchlist — Especially if you’re looking for:
✔️ Margin-strong consumer plays
✔️ Emerging market exposure
✔️ PepsiCo franchise scalability
✔️ ESG-integrated FMCG businesses
📢 Final Takeaway
🧠 VBL’s Q2 CY2025 performance highlights a resilient business model, capable of weathering seasonal slowdowns while keeping growth and margins intact. Long-term investors may consider this dip as a consolidation opportunity, backed by steady international demand and capex-driven visibility.
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