Varun Beverages says six-month inventory to cushion cost spike

Varun Beverages Ltd, PepsiCo’s largest franchise bottler, has built up to six months of raw material inventory, cushioning it against near-term disruptions as plastic and aluminium costs rise amid the US-Iran war.

“In our international markets, our effect will be in the raw material, practically zero to a couple of points maybe because we are well stocked till even not this quarter, but the next quarter also. We normally carry six months inventory in international,” said Raj Pal Gandhi, whole-time director, in the quarterly analyst call.

Mint had earlier reported that prices of PET resin (used for plastic bottles) and polyolefins (used for bottle caps, labels and pouches) have surged by 40–80% in March after the war broke out.

“As far as India is concerned, we will have minor effect because again, we were reasonably covered for this quarter, but for the next quarter, we will have some effect, which is, but we are covering that by reducing our discounts and becoming more efficient,” said Gandhi in the call.

The management added that this will give them an edge over competition because “I don't think competition carries anywhere close to six months,” said Gandhi.

Profit and revenue

Varun Beverages posted a 20% year-on-year (y-o-y) rise in its consolidated net profit to ₹ 872 crore in the March quarter of 2026, as compared to 726 crore in the same quarter last year, according to an exchange filing. The company’s revenue from operations stood at ₹6,721 crore, up 18.3% from ₹5,680 crore reported in the corresponding quarter of the previous financial year. The company follows a January to December financial year.

Additionally, aluminium can sales are less than 2% for Varun Beverages, according to the management. “We have tied up a reasonable quantity to more than cover our 2% volumes and maybe a little higher. So we will be able to get cans. They are slightly more expensive,” said Gandhi said.

On the volume front, consolidated sales volumes grew by 16.3% in the quarter, driven by volume growth of 14.4% in India and 21.4% in international territories.

“The mix of low sugar and no sugar products increased to the level of 63% approximately of consolidated sales volume during the quarter,” said Gandhi.

Positive outlook

The company expressed a positive outlook for the next quarter. “If the weather remains like this, there's no reason why we shouldn't do extremely well, “said Ravi Jaipuraia, chairman of Varun Beverages Ltd. in the call.

The India Meteorological Department anticipates below-average rainfall this monsoon season and a likelihood of El Niño conditions developing, which could pose a risk of heatwaves in these months.

The management said its lemon drink Nimbooz is growing at 50-60% YoY, dairy brand Cream Bell is growing at 60-70% and Tropicana PET bottles over 100%.

"We are expanding at about 300,000- 400,000 outlets every year. Hopefully, this year we might expand half a million outlets,” said Gandhi.

Analysts are positive about the industry growth. “Varun Beverages Ltd is insulated by its portfolio mix to an extent; Campa’s core cola focus leaves 80% of Varun Beverages Ltd’s portfolio (high-margin energy (Sting) & other segments) unchallenged. Expect ~10% India volume CAGR (CY25-28),” analysts at Ambit Institutional Equities said in a report earlier in April.

Shares of the company closed at ₹519.50 on Monday, up 5.9% from the previous close in a largely positive market.