Varun Beverages Q1 Review – Operating Leverage, Higher Realization Gains: Motilal Oswal

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Varun Beverages Ltd. delivered robust sales growth, supported by strong volume growth (19% YoY) across all geographies and higher realization (6% YoY).

Volume growth was driven by the early start of summer in India, which translated into higher demand.

Despite higher input cost, Varun Beverages’ operational performance has improved significantly due to higher realization and operating leverage. Consequently, EBITDA/unit cash improved by 17% year-on-year to Rs 29.5.

Considering its Q1 CY22 performance, we are raising our CY22/CY23 earnings estimate by 7%/6% as the growth trajectory is expected to continue with robust demand from out-of-home consumption and strong support from newly emerging products. launched.

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