• Consolidated sales volume grew 16.3% YoY to 363.4 million cases, with India delivering 14.4% growth and international territories achieving 21.4% growth
• Revenue increased 18.1% YoY to INR 65,742 million with EBITDA growing 21% to INR 15,289 million, reflecting 55 bps margin improvement to 23.3%
• Completed acquisition of Tweezer in South Africa at enterprise value of ZAR 2,053 million (approximately INR 800 crores revenue), and signed agreement to acquire Quickly Dairy at $238 million enterprise value (approximately INR 160 crores revenue)
• India EBITDA margins improved by 112 basis points driven by operational efficiencies from strong volume growth and improved gross margins
• Energy drinks portfolio showing exceptional growth with Adrenaline Rush performing 'phenomenally well' and new STING Classic launch in both cans and PET showing 'fabulous' initial response
• Dairy business growing at 60-70% and Nimbus at 50-60%, with Tropicana PET growing over 100%, demonstrating successful portfolio premiumization
• Successfully secured 6 months of raw material inventory for international markets and substantial coverage for Q2 in India, providing competitive advantage amid supply constraints
• Board approved interim dividend of INR 0.5 per share (25% of face value), totaling approximately INR 1,691 million cash outflow

Varun Beverages delivered a strong Q1 CY2026 performance with 16.3% volume growth and 18.1% revenue growth to INR 65,742 million, driven by robust demand across both India (14.4% volume growth) and international markets (21.4% volume growth). Management expressed high confidence in sustained double-digit growth trajectory, supported by favorable weather conditions, expanding distribution network (targeting 500,000 new outlets in CY2026), and strategic capacity additions that provide significant operational leverage, though near-term input cost pressures from geopolitical tensions remain a monitored risk.

VBL reported strong Q1 CY2026 results with consolidated revenue growing 18.1% YoY to INR 65,742 million, while volume growth of 16.3% reached 363.4 million cases. Net realization per case improved 1.6% YoY at consolidated level, though India realizations declined marginally by 1.5% due to volume growth initiatives including pack upsizing and selective price point launches. Gross margins expanded 62 bps to 55.2% supported by early raw material stocking despite inflationary environment. EBITDA grew 21% to INR 15,289 million with margins improving 55 bps to 23.3%, driven by 112 bps margin expansion in India from operational efficiencies and strong volume leverage. PAT increased 20.1% to INR 8,787 million. Depreciation rose 30.9% due to four new plants commissioned in FY2025 (Bagsal, Priyasal, Dhamtal, Meghalaya), while finance costs increased 18% primarily from the Tweezer acquisition. The product mix showed CST at 73.6% of volumes, NCBs at 7.5%, and packaged drinking water at 18.9%, with low/no sugar products reaching approximately 63% of consolidated volumes.

Management demonstrated strong confidence throughout the call, with Chairman Ravi Jaipuria expressing bullishness on sustained double-digit growth for 'the next five, ten years at least' in India. Key strategic priorities emphasized include: (1) aggressive distribution expansion targeting 500,000 new outlets in CY2026 versus base of 4 million outlets, representing over 10% growth; (2) leveraging operational efficiencies from new large-scale plants that produce at half the cost of older facilities with 5x production capacity per line (1,000 bottles/minute vs 200); (3) maintaining pricing discipline by reducing discounts rather than eroding margins amid input cost pressures; and (4) portfolio diversification through successful scaling of premium categories (dairy, energy drinks, juices). Management repeatedly highlighted their competitive advantage through proactive raw material procurement (6 months inventory internationally, substantial Q2 coverage domestically) versus competition, stating 'other people will blink before I blink.' The tone was particularly optimistic about the current summer season performance through April, with management noting 'trends are looking very good' and expecting the quarter to be 'much better than what we've already had.' Strategic M&A in South Africa through Tweezer and Quickly Dairy acquisitions positions VBL for consolidated growth and operational synergies in Africa's largest soft drink market.

The primary near-term risk is input cost inflation driven by geopolitical tensions and higher crude oil prices, particularly affecting PET resin and aluminum cans. While management indicated strong coverage for Q2 (6 months inventory internationally, substantial India coverage), they acknowledged potential margin pressure in subsequent quarters if crude remains at $100+ levels, though emphasized competitors face greater challenges due to lower inventory buffers. Transportation costs represent an unhedgeable exposure that could impact margins. Aluminum can availability emerged as a specific constraint, with VBL facing some supply limitations despite cans representing less than 2% of volumes - this particularly affected the rapidly-growing Adrenaline Rush energy drink where 'demand is much higher than what cans we can get.' Competition intensity remains elevated with Campa aggressively adding capacity and growing volumes, though management views this positively as expanding overall market size. The business faces inherent weather risk, with Q1 CY2025 providing an easy comparable due to unseasonal rains, and management unable to guarantee similar favorable conditions continue. Realization pressures persist in India (down 1.5% in Q1) due to strategic pack upsizing and selective INR 10 price point launches, though management emphasized this is volume-driven strategy with margin impact offset by operational leverage. International markets carry execution risk integrating recent acquisitions (Tweezer, pending Quickly Dairy) and scaling food distribution business. Working capital intensity may increase given elevated raw material inventory positions, though this is strategic hedging against supply chain disruptions.

Revenue Outlook: Management expects sustained double-digit volume growth for 'next five, ten years at least' in India, with confidence in strong Q2 performance based on favorable early trends through April. International markets also expected to deliver double-digit growth absent external disruptions.

Margin Outlook: Management confident in maintaining margins despite input cost inflation through: (1) reduced discounting, (2) operational efficiencies from new large-scale plants producing at half the cost of older facilities, (3) raw material coverage through Q2, and (4) volume leverage. Stated 'we are not worried about few rupees' if volumes remain strong.

Key Targets:

• Distribution expansion: Target 500,000 new outlets in CY2026 (10%+ growth on 4 million base)
• Chilling equipment: Adding approximately 500,000 visi-coolers between VBL, competition, and independent retailers (total market ~1 million units annually)
• CapEx: Less than INR 500-600 crores in CY2026 given sufficient existing capacity
• Dairy business: Targeting 60-70% growth trajectory
• Energy drinks: Scaling Adrenaline Rush and new STING Classic across markets

The Q&A session revealed analysts were primarily focused on three key areas: (1) input cost inflation risks and management's mitigation strategies, (2) the sustainability of volume growth and realization trends, and (3) competitive dynamics amid capacity additions by rivals. Management consistently emphasized their strategic inventory positioning as a key competitive advantage, with 6 months coverage internationally providing buffer against supply chain disruptions and cost inflation. On the critical margin question, management was confident but pragmatic, noting they would reduce discounts industry-wide if needed rather than absorb cost increases, and emphasized operational efficiencies from new large-scale plants as structural margin support. Analysts probed the realization decline in India and apparent improvement from -4% to -1.5%, with management clarifying that INR 10 price points are used very selectively (<5% of volumes) and premiumization efforts (dairy at 3x realization, energy drinks) are offsetting mix pressures. The discussion on international acceleration to 21.4% growth revealed broad-based strength across territories rather than South Africa concentration. Management's tone throughout was notably confident and bullish, particularly on summer season trends through April and long-term double-digit growth trajectory. When pressed on whether margins could be maintained if crude stays elevated for multiple quarters, management avoided specific guidance but emphasized competitive positioning advantage and willingness to adjust discount strategy market-wide. Overall, management successfully addressed near-term inflation concerns while reinforcing confidence in structural growth drivers (distribution expansion, portfolio premiumization, operational leverage) and demonstrated strategic foresight in raw material procurement that provides near-term insulation from supply chain volatility.