Despite near-term pressure, investors find flavour in Varun Beverages

Besides good business recovery, improved margin outlook boost investor sentiment

Despite a 69 per cent year-on-year fall in pre-tax profit to Rs 181.9 crore in the June 2020 quarter (Q2), led by 46.4 per cent volume plunge, the stock of Varun Beverages has gained 15 per cent since the announcement of results versus a 1.7 per cent rise in the Nifty FMCG index. PepsiCo’s franchise, which follows the January-December accounting period, announced its quarterly results on Tuesday this week. Good business recovery and improved margin outlook boosted investor sentiment towards the stock.

Though out-of-home consumption is under pressure due to the pandemic, rising in-house consumption of carbonated soft drinks (CSD) is