The company saw quarterly gross margins fall by 334 basis points to 53.1%, even as revenue climbed to Rs 6,607.56 crore and profit after tax reached Rs 830.59 crore. Surging packaging material expenses and a 104% jump in higher-cost domestic non-beverage sales drove the margin contraction. However, consumer adoption of low- and no-sugar drinks, which comprise 88% of the Indian portfolio, effectively insulated the business from a 16% increase in sugar prices. Total sales volume still advanced 28.7% to 354.4 million cases, underpinned by solid demand across international markets.
Key points
Geopolitical disruptions and sales of higher-cost non-beverage goods are currently compre…: Geopolitical disruptions and sales of higher-cost non-beverage goods are currently compressing the bottler's operating profitability.
The company continues to aggressively scale its international footprint across Africa thr…: The company continues to aggressively scale its international footprint across Africa through recent strategic acquisitions and distribution partnerships.
Diversification is accelerating through the newly incorporated KIVA Spirits to capture em…: Diversification is accelerating through the newly incorporated KIVA Spirits to capture emerging ready-to-drink and alcoholic beverage market segments.
Sources checked by our analysis pipeline: 1
The stock pared some of its losses but continued to trade in the red. At 1:34 pm, Varun Beverages shares were trading at Rs 402.25, down 3.03% from the previous close.
The decline came despite the company reporting strong growth in revenue, profitability and sales volumes, with higher packaging material costs weighing on margins during the quarter.
Varun Beverages Q3 results
Varun Beverages reported a 13.5% year-on-year increase in consolidated profit after tax (PAT) to Rs 830.59 crore in Q3 CY2026, compared with Rs 731.51 crore in the corresponding quarter last year.
Revenue from operations, net of excise and GST, grew 33.2% year-on-year to Rs 6,607.56 crore from Rs 4,960.69 crore in Q3 CY2025.
EBITDA increased 25.1% to Rs 1,426.71 crore from Rs 1,140.41 crore in the year-ago quarter.
However, EBITDA margin moderated by 140 basis points year-on-year to 21.6% in Q3 CY2026, primarily due to a contraction in gross margins. Operating leverage from strong volume growth across India and international markets partially offset the pressure.
Gross margin declined 334 basis points to 53.1% during the quarter, primarily due to…
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