Varun Beverages Q2 Results: Profit grows 59% to Rs381 cr, beats estimates

India's Varun Beverages reported a better-than-expected third-quarter profit on Tuesday as the Pepsi bottler benefited from price increases it had implemented to protect its margins.

Profit grew by 59% to 3.81 billion Indian rupees ($46.1 million) in the three months ended Sept. 30. Analysts on average had expected a profit of 2.32 billion rupees, according to Refinitiv IBES data.

Varun Beverages, like most consumer majors including Nestle India, and Dabur India, raised prices of its products, while a broader customer return to pre-pandemic routines has pushed demand from restaurants and bars higher.

Revenue from operations increased 33% to 32.48 billion rupees for the company, which makes and bottles several PepsiCo Inc-branded drinks such as Mirinda, Mountain Dew, and Tropicana.

Consumer packaged-goods makers have reeled from COVID-19-led high costs of raw materials, including that of polyethylene terephthalate (PET) plastic used in packaging sodas, with the onset of the Russia-Ukraine war pushing expenses higher.

For Varun Beverages, total expenses soared 29% to 27.48 billion rupees.

The company's move to increase its prices helped make up for higher expenses, but a few analysts had raised concerns that more expensive sodas and juices could deter cash-strapped consumers, particularly in rural India.

A few packaged foods makers, including Saffola cooking oil maker Marico, have indicated that product prices could drop from here on as inputs costs also fall from their recent highs.

Varun Beverages added its Morocco business would begin distribution and sale of several PepsiCo chips brands such as Lays, Doritos, and Cheetos from January in the country.

Shares were up nearly 4% at 1,087.50 rupees, adding to their 77% gain this year.

($1 = 82.6980 Indian rupees)

(Reporting by Praveen Paramasivam in Bengaluru; Editing by Janane Venkatraman)