ICICI Securities: Varun Beverages’ Faster-Than-Expected Revenue Recovery
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ICICI Securities Report
Varun Beverages Ltd.’s sales volumes in Q3 CY20 are around 96% of volumes in Q3 CY19 and there was double digit volume growth in September 2020 indicating faster-than-expected recovery in revenues.
There is increase in in-home consumption of carbonated soft drinks. We believe when the business activity returns to normalcy, some consumers will continue with in-home consumption. This opens up new window of beverage consumption.
The company has initiated multiple cost saving programs and some of the savings will be structural in nature. It will boost margins/return ratios when the consumption returns to normalcy.
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