ICICI Direct: Varun Beverages’ Volume To Completely Normalise Only In 2021

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..ICICI Direct Report.Varun Beverages Ltd.’s Q2 CY20 results were on expected lines with 41.6% sales fall and 46.4% volume de-growth. Realisation improved 8.9% with cut down in promotions and product mix change (decline in water business was even more severe).The results were impacted by lockdown with manufacturing, supply chain operations staying disrupted in April. Though the company started production quite early in April, demand conditions were slack with significant fall in ‘on the go’ consumption.Moreover, shutting down of restaurants, cafes, multiplex (comprising approximately 10% of sales) also negatively impacted volumes. Volumes were down 75% in April. They slowly improved in June with 25% decline with the start of unlocking phase.Operating margins were down 500 basis points to 23% with employee spends and overhead spends up (percentage of sales) by 506 basis points and 207 basis points, respectively, largely due to negative operating leverage.However, some of this was mitigated by 212 basis points gross margin expansion. The gross margin expansion was largely due to 12.5% decline in polyethylene terephthalate (PET) chip prices and 6% decline in sugar prices (in April, May).Net profit was down 64.7% to Rs 143 crore impacted by lower operating profit. Interest cost was down from Rs 84.4 crore to Rs 74.2 crore mainly due to reduction in debt from Rs 3246 crore to Rs 2932 crore..Click on the attachment to read the full report:.DISCLAIMERThis report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the brokerage and do not represent the views of BloombergQuint. .Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

ICICI Direct: Varun Beverages’ Volume To Completely Normalise Only In 2021

ICICI Direct: Varun Beverages’ Volume To Completely Normalise Only In CY21

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