VBL is a key player in the beverage industry, and one of the largest franchisees of PepsiCo in the world (outside USA). The company produces and distributes a wide range of carbonated soft drinks (CSDs) as well as large selection of non-carbonated beverages (NCBs), including packaged drinking water sold under the trademark of PepsiCo.
In Q3 CY22, VBL's profit after tax increased by 53.3 per cent to Rs 396 crore from Rs 258 crore in Q3 CY21, driven by high growth in revenue from operations, improvement in margins, and transition to a lower tax rate in India.
Revenue from operations grew by 32.5 per cent YoY to Rs 3,177 crore, on account of robust volume growth over last year, and higher realization on a consolidated basis. Ebitda margins stood healthy at 22 per cent during the quarter, led by the higher realization, and operating leverage from increased sales volume, VBL said.
The company's India business has delivered a solid organic volume growth of 22 per cent led by a favorable demand environment, and strong performance of energy drink - Sting. In addition, healthy double-digit sales volume growth of 31 per cent in key international markets further assisted performance during the quarter, the management said.
Going ahead, VBL expects double-digit volume growth to continue, led by 5-10 per cent annual outlet expansion and growth in revenue per outlet.
The festive season in Q4 is expected to further aid consumption trends in this calendar year. The management is confident that the company can sustainably deliver healthy volume growth across all product categories going forward, and further strengthen the company’s market position in the beverage industry.
"The Q3 beat leads to a 5-6 per cent earnings upgrade for CY23/24E. In our view, higher mix of brownfield capex should drive further RoIC gains, to around 26 per cent by CY24E. Potential share gains, best-in-class efficiencies and improvement in the RoIC profile keep us positive. We maintain BUY with revised target price of Rs 1,280 (based on 39x Sep-24E EPS). Scale-up of the foods portfolio in India/Morocco (new agreement) remains a potential upside," analysts at Emkay Global Financial Services said in a result update.
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