Varun Beverages shares in focus as firm initiates expansion in Africa

Shares of Varun Beverages Ltd, the largest PepsiCo franchise bottler outside the United States, are in focus today after the firm announced the incorporation of a wholly owned subsidiary in Kenya—VBL Industries (Kenya) Limited—aimed at strengthening its African operations.

The new entity will primarily focus on manufacturing, distributing, and selling beverages in Kenya, marking another step in the company's ongoing international expansion. This follows its October announcement of an exclusive distribution agreement with Danish brewer Carlsberg Breweries for entry into the African beer market.

Shares of Varun Beverages closed at ₹454.00, down by ₹3.40 or 0.74% on Wednesday from the previous close. Market cap of the firm stood at Rs 1.53 lakh crore.  

In its most recent quarterly results, Varun Beverages reported a consolidated sales volume increase of 2.4% year-on-year to 273.8 million cases, despite continued heavy rainfall across India, which led to nearly flat volumes in the domestic market.

The company's international volumes, however, grew by 9%, driven primarily by strong performance in South Africa. Revenue for the quarter rose by 2% to ₹4,896.7 crore, while net profit increased 20% to ₹742 crore, supported by lower finance costs and higher other income—largely attributed to interest on deposits and favourable currency movements in international markets.

Gross margins improved by 119 basis points to 56.7%, aided by a higher share of water sales and ongoing backward integration initiatives in overseas markets. The company also noted that its snacks facility in Morocco is now operating at full capacity, and indicated plans for a new processing plant in Zimbabwe.