Varun Beverages Q3 net profit rises 13% YoY, but margins fall

Varun Beverages (VBL), PepsiCo's second-largest franchise bottler globally, reported 13.5% year-on-year increase in consolidated net profit at ₹830.6 crore for the July-September 2026 quarter, but the company's shares fell 4.39% to hit an intraday low of ₹396.5 apiece after it reported a moderation in operating margins.

VBL, which follows a calendar year, said in an exchange filing that sales were driven by double-digit volume growth in India and international markets. It said revenue from operations increased 33.3% to ₹6,815.6 crore in the quarter under consideration. On a standalone basis, the company reported revenue from operations at ₹3,822.4 crore, up 24.75% on-year.

However, the bottling company reported a gross margin decline by 334 bps to 53.1% in the quarter, on account of higher packaging material costs for shrink films and cans, driven by geopolitical disruptions. VBL said in a management commentary that surge in prices of sugar was offset by increase in low sugar/no sugar products, which grew from 44% in Q3 CY2025, to as high as 88% in the July-September 2026 quarter. It said consolidated sales volume grew 28.7% to 354.4 million cases in the quarter under consideration, compared to 275.3 million cases in the corresponding year-ago quarter. The company attributed the numbers to robust volume growth of 22.5% in India and 39.9% in its international markets.

On October 14, Nestle India too reported standalone net profit increase of 36% year-on-year for the quarter ended September at ₹1,027 crore, but its stock plunged 7.76% after it flagged food inflation and commodity cost pressures as key concerns. Earlier this year, VBL extended its exclusive bottling and trademark license agreement with PepsiCo till April 30, 2049, replacing its earlier term which had been valid till April 30, 2039. It also inked a revised deal with PepsiCo at the same time.