Varun Beverages says six-month inventory to cushion cost spike
Varun Beverages Ltd, PepsiCo’s largest franchise bottler, has built up to six months’ worth of raw materials inventory, buffering against short-term disruptions due to rising costs of plastic and aluminum during the US-Iran war.
“In our international markets, our impact will be on raw materials, almost zero to a few percentage points because we are well stocked not only until this quarter but also until the next quarter. We normally carry six months of stock internationally,” full-time director Raj Pal Gandhi said on the quarterly analyst call.
Mint We mentioned that the prices were announced before PET resin (used for plastic bottles) and polyolefins (used for bottle caps, labels and bags) increased by 40-80% in March after the start of the war.
“As far as India is concerned, we will have a small impact because, again, we have maintained a reasonable level of protection this quarter, but we will have some impact in the next quarter, so we are meeting that by reducing our discounts and becoming more efficient,” Gandhi said during the meeting.
Management added that this would give them a competitive advantage because Gandhi said, “I don’t think the competition will last anywhere near six months.”
In profit
Varun Beverages recorded a 20% year-on-year increase in consolidated net profit. ₹ 872 crore in the March quarter 2026 compared to 726 crore in the same quarter last year, according to an exchange filing. The company’s revenue from operations in February was: ₹6,721 crore, up 18.3% ₹5,680 crore was reported in the corresponding quarter of the previous financial year. The company follows a January-December fiscal year.
Additionally, aluminum can sales are less than 2%. According to management Varun Beverage. “We have tied up a reasonable amount to cover our 2% volumes, maybe a little higher. So we will be able to buy cans. They are a little more expensive,” Gandhi said.
From a volume perspective, consolidated sales volumes increased 16.3% in the quarter, driven by volume growth of 14.4% in India and 21.4% in international regions.
“The mix of low-sugar and sugar-free products increased to approximately 63% of consolidated sales volume during the quarter,” Gandhi said.
positive outlook
The company showed a positive outlook for the next quarter. “If the weather stays like this, there’s no reason why we can’t do extremely well,” Ravi Jaipuraia, chairman of Varun Beverages Ltd., said during the meeting.
The India Meteorological Department predicts below-average rainfall this monsoon season and the possibility of El Niño conditions developing during these months, which could pose a risk of heat waves.
Management said lemon drink Nimbooz grew 50-60% year-on-year, while dairy brand Cream Bell grew 60-70% and Tropicana PET bottles grew over 100%.
“We are expanding around 300,000-400,000 outlets every year. I hope we can expand half a million outlets this year,” Gandhi said.
Analysts are positive about the growth of the sector. “Varun Beverages Ltd remains somewhat insulated from the portfolio mix; Campa’s core cola focus leaves 80% of Varun Beverages Ltd’s portfolio (high-margin energy (Sting) and other segments) unchallenged. We expect a CAGR of around 10% (CY25-28) of India volume,” analysts at Ambit Institutional Equities said in an early April report.
The company’s shares as of the closing date ₹On Monday, it was at 519.50, up 5.9% from the previous close in a largely positive market.
