{"id":55,"date":"2019-08-05T11:32:42","date_gmt":"2019-08-05T11:32:42","guid":{"rendered":"http:\/\/www.assetmultiplier.co.in\/blog\/?p=55"},"modified":"2019-10-03T11:59:57","modified_gmt":"2019-10-03T11:59:57","slug":"varun-beverages-ltd-2qcy19-hot-summer-boosts-beverage-sales","status":"publish","type":"post","link":"https:\/\/www.assetmultiplier.co.in\/blog\/2019\/08\/05\/varun-beverages-ltd-2qcy19-hot-summer-boosts-beverage-sales\/","title":{"rendered":"Varun Beverages Ltd. 2QCY19 \u2013 Hot summer boosts beverage sales"},"content":{"rendered":"\n

Dated: 2nd August 2019 <\/em><\/p>\n\n\n\n

Varun Beverages Ltd. (VBL) reported consolidated revenue growth of 36.5% YoY to Rs 28,105 mn in 2QCY19.
\u2022 Consolidation of South and West regions from 1St May 2019, extended summers, penetration into existing geographies and good growth from international geographies led to volume growth of 44% YoY. Out of total volume sales of 192 mn cases, 172 mn were sold in India and 24 mn cases in international markets (Sri\u00a0Lanka, Morocco and Zimbabwe).
\u2022 Organic volume growth in India was 18.5% whereas it was 34.2% in international geographies.\u00a0
\u2022 Realisation per case declined by ~5% due to change in product mix in India post-acquisition of South and West sub-territories, the introduction of packages water in Morocco and lower sales realisation in Zimbabwe to avoid forex fluctuations.\u00a0
\u2022 Gross Margins declined by 70 bps as sugar prices increased by ~3%. Management expects raw material prices to be stable for CY19.
\u2022 Net debt stood at Rs. 37,295 mn as on June 30, 2019, as against Rs. 26,715 mn as on 31st December 2018. Debt: Equity ratio stood at 1.49x as on 30th June 2019 and Debt: EBITDA ratio stood at 2.95x for the trailing twelve months EBITDA.\u00a0
Management Commentary
\u2022 Company will start selling beverages in Zimbabwe in local currency now instead of USD. Hence, revenues may move up in the coming quarters, but there is a possibility of providing for higher currency depreciation.\u00a0
\u2022 Production of Tropicana Juices at its Pathankot plant has commenced from 1st Jul\u201919.
\u2022 The company plans to enter the dairy products market under its own brands in the coming quarters. It will be required to pay 1% royalty to Pepsi for selling these dairy brands.
\u2022 Capex for CY19 and CY20 is expected to remain less than depreciation cost.
\u2022 Company is running at ~60% capacity utilisation levels after the newly acquired regions.
\u2022 EBITDAM are expected to be in the range of 21-22% for consolidated business.
\u2022 Management expects ROCE levels to improve by 200-250 bps every year.<\/p>\n\n\n\n

Consensus Estimate (Source: market screener website)
The closing price of VBL was Rs 623\/- as of 02-August-19. It traded at 43x\/ 34x the consensus EPS for CY 20E \/ CY 21E EPS of Rs 14.6\/18.6 respectively\u00b7 Consensus target price of Rs 713\/- implies a PE of 38x on CY21E EPS of Rs 18.6<\/p>\n","protected":false},"excerpt":{"rendered":"

Dated: 2nd August 2019 Varun Beverages Ltd. (VBL) reported consolidated revenue growth of 36.5% YoY to Rs 28,105 mn in 2QCY19.\u2022 Consolidation of South and West regions from 1St May 2019, extended summers, penetration into existing geographies and good growth from international geographies led to volume growth of 44% YoY. Out of total volume sales […]<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[30],"tags":[],"_links":{"self":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/55"}],"collection":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/comments?post=55"}],"version-history":[{"count":1,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/55\/revisions"}],"predecessor-version":[{"id":56,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/posts\/55\/revisions\/56"}],"wp:attachment":[{"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/media?parent=55"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/categories?post=55"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.assetmultiplier.co.in\/blog\/wp-json\/wp\/v2\/tags?post=55"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}