Varun Beverages Q2 CY2026 Results: Revenue Rises 20.4%, PAT Grows 15.1%, PepsiCo India Pact Extended to 2049

What Happened ?

Varun Beverages reported robust Q2 CY2026 results driven by strong consumer demand, wider distribution and continued expansion in international markets.

India recorded 14.4% volume growth, while international operations grew 38.4%, aided by the integration of the recently acquired Twizza business in South Africa.

Beyond financial performance, the company announced several strategic initiatives, including extending its exclusive PepsiCo bottling agreement in India until April 2049, partnering with Asahi Group to introduce the CALPIS beverage brand in India and signing an agreement to acquire Devyani Food Industries Kenya, strengthening its East African footprint. 

key details

Strong Volume-Led Growth:

Varun Beverages continued its growth momentum across both domestic and international operations.

Key highlights include:

• Consolidated sales volume increased 19.8% YoY.
• India volumes grew 14.4% YoY.
• International volumes rose 38.4% YoY.
• Twizza contributed 11.8 million cases during the quarter.
• Beverage revenue increased 21.2% YoY.
• Beverage realisation improved 1.2% YoY.

Note:

• Healthy summer demand, expanded manufacturing capacity and deeper distribution supported strong volume growth across key markets.

Profitability Remained Healthy:

Despite integrating the relatively lower-margin Twizza business, profitability remained robust.

Key developments include:

• EBITDA increased 17.2% YoY.
• EBITDA margin stood at 27.7%.
• PAT increased 15.1% YoY.
• Gross margin improved to 55.0%, supported by better international mix and operational efficiencies.

Management stated that in India, gross margins benefited from:

• Early procurement of key raw materials.
• Lower sugar consumption due to increasing sales of low- and no-sugar beverages.
• Continued manufacturing efficiencies.

PepsiCo Agreement Extended Until 2049:

One of the most significant strategic announcements during the quarter was the revision of VBL’s Exclusive Bottling Appointment and Trademark Licence Agreement with PepsiCo.

Key changes include:

• Agreement extended from 2039 to April 2049.
• Removal of the earlier restriction requiring VBL to operate solely as a PepsiCo SPV.
• Greater operational flexibility.
• Ability to pursue scale, synergies and future growth opportunities.

Note:

• This extension significantly enhances long-term business visibility and reinforces VBL’s strategic partnership with PepsiCo.

Partnership with Asahi Group:

Varun Beverages entered into a franchise agreement with Asahi Group Holdings to introduce the CALPIS brand in India.

Highlights include:

• Entry into the value-added fermented dairy beverage category.
• Launch planned with Original and Mango variants.
• CALPIS is one of Japan’s oldest and most recognised beverage brands with over 100 years of history. 

This partnership broadens VBL’s product portfolio beyond carbonated drinks and juices.

Kenya Expansion:

The company also announced the acquisition of the business of Devyani Food Industries (Kenya) Limited.

Transaction highlights:

• Purchase consideration of US$32 million (approximately ₹305 crore).
• Acquired through VBL Industries (Kenya) Limited.
• DFIKL generated over ₹300 crore revenue during FY2026.
• Provides an established route-to-market network in Kenya.
• Supports expansion into carbonated soft drinks and energy drinks in East Africa. 

Dividend:

The Board approved an interim dividend of ₹0.50 per share, equivalent to 25% of the face value.

• Total estimated cash outflow: approximately ₹169 crore.

Management Outlook:

Chairman Ravi Jaipuria expressed confidence in sustaining long-term growth, citing:

• Rising packaged beverage consumption.
• Favourable demographics.
• Increasing disposable incomes.
• Expanded manufacturing capacity.
• Strong distribution infrastructure.
• Diversified beverage portfolio.
• Continued international expansion.

Risk Analysis

Summary:

• Although operating performance remains strong, investors should monitor integration of recent acquisitions, commodity price inflation and weather-dependent beverage demand.

Key Risks:

• Volatility in sugar, PET resin and packaging costs.
• Weather-related fluctuations in beverage demand.
• Integration risks associated with Twizza and Kenya acquisition.
• Currency fluctuations in international markets.
• Competitive pricing within the beverage industry.

Worst Case:

• Higher raw material inflation, weaker summer demand or slower integration of international businesses could moderate revenue growth and pressure operating margins.

Risk Level: Moderate

Company Commentary

• Chairman Ravi Jaipuria stated that VBL remains well positioned for sustained profitable growth, supported by strong manufacturing capacity, strategic partnerships, expanding international operations and increasing consumer demand.
• Management also highlighted the PepsiCo agreement extension, CALPIS partnership and Kenya acquisition as important long-term growth drivers.