 "Varun Beverages briefly becomes 4th largest FMCG by market capitalisation")
Varun Beverages became the fourth largest fast-moving consumer goods (FMCG) company by market capitalisation (m-cap) briefly during Friday’s trade after overtaking Britannia Industries.
During the final trading day of the week, Varun Beverages’ market capitalisation hit a peak of Rs 1,13,487 lakh crore on the BSE. The firm gave up some of the gains to end Friday at Rs 1, 10,519 lakh crore which is fifth by m-cap.
While most consumer companies are struggling with volume growth, Varun Beverages outperformed its peers as its sales for the fourth quarter of the 2022-23 financial year (Q4FY23) surged 37.7 per cent year-on-year to Rs 3,893 crore. Its growth was largely driven by a volume uptick of 24.7 per cent.
The company said that its growth was strong across all regions and the rural segment outperformed its urban peer.
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In Q4FY23, volumes in international markets were up 8 per cent and what aided revenue was realisation growth of 10.4 per cent.
Realisation per case stood at Rs 174, led by a price hike in some stock-keeping units (SKUs) at the end of the year-ago quarter and mix improvement in smaller SKUs, such as Sting.
The operating performance of the company was also strong in Q4FY23. Lower raw material prices and better product mix rubbed off positively on gross margins which rose 90 basis points (bps) YoY to 52.4 per cent. Strong revenue growth translated into higher operating leverage, helping the company expand its operating profit margins by 170 bps to 20.5 per cent.
The company is also expanding its presence in the value-added dairy beverage, sports drinks, and juice segments to sustain growth momentum.
Research analysts Devanshu Bansal and Bhavika Choudhary of Emkay Research, said, “Sting is a huge success, with about 500 bps of incremental contribution to calendar years 2019 through 2022 at a compound growth rate of 23 per cent. Similar traction in new products can surprise positively.”