Varun Beverages shares rise 1.61% as brokers cut target prices
Varun Beverages shares were up 1.61%, or ₹6.30, at ₹398.30 by 11.40 AM on Monday, according to BusinessLine. The PepsiCo bottler's stock had touched an intraday high of ₹404.35 before giving back part of
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Varun Beverages shares were up 1.61%, or ₹6.30, at ₹398.30 by 11.40 AM on Monday, according to BusinessLine. The PepsiCo bottler’s stock had touched an intraday high of ₹404.35 before giving back part of the gain, having opened at ₹395.80 against Friday’s close of ₹392.00.
BusinessLine reported turnover of ₹181 crore on 45.37 lakh traded shares, with the sell side slightly ahead at 52.33% against 47.67% on the buy side. The session followed Q3CY26 results published on October 30 and a Friday selloff that Mint put at 5.5%.
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Key facts
- Consolidated revenue for Q3CY26 rose 33.2% year-on-year to ₹66,076 million, or ₹6,607 crore, per BusinessLine and Mint.
- Volume grew 28.7% year-on-year to 354.4 million cases, split between 22.5% growth in India and 39.9% in international markets, according to Mint; BusinessLine reported roughly 29% growth to 354 million cases.
- Gross margin contracted 334 basis points to 53.1%, while EBITDA margin fell 140 basis points to 21.6%, BusinessLine reported.
- HSBC kept a Buy with a ₹540 target, Motilal Oswal reiterated Buy at ₹510, JM Financial cut its target to ₹485 from ₹505, Choice Institutional Equities reduced its target to ₹460 from ₹550, and Elara Securities moved to Accumulate with a ₹470 target from ₹490.
- The stock is down about 19% year-to-date per BusinessLine and about 20% in CY26 per Mint, and sits well below its 52-week high of ₹555.80 reached in June.
Volume strength against packaging costs
Packaging inputs did the damage. Higher costs for preforms, shrink film, closures and cans, linked to geopolitical supply disruptions, took about 300 basis points off gross margin, with low-margin non-beverage sales in India subtracting another 100 basis points, BusinessLine reported.
Mint reported that packaging inflation cost nearly 300 basis points on India gross margin and 272 basis points internationally. Beverage realization per case rose 2.2%, and India unit realization edged up 0.5%, the first reversal of recent declines, aided by premiumisation and reduced trade spending.
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On price, Mint reported that Varun Beverages has not raised prices across its carbonated soft drinks portfolio but has cut Sting’s pack size from 300 ml to 250 ml. The company expects the wider industry to respond through price increases or lower trade spending and intends to follow, while sticking to ₹20, ₹50 and ₹100 price points and declining to compete on unviable low prices.
Why it matters
Brokerages are effectively splitting the Q3CY26 result into two stories: demand that held up better than the June quarter, and a cost base that is outrunning it. JM Financial tied its target cut to higher depreciation and interest after the Twizza acquisition in South Africa; depreciation and finance costs rose 34.5% and 53.5% year-on-year respectively in the quarter, Mint reported, which held back profit after tax.
DAM Capital cut its CY27 earnings per share estimate by 6.5% on higher depreciation from large capex, Mint reported, while trimming CY27E EPS by 3.4% was Elara’s approach per BusinessLine. Nuvama flagged that the planned CY27 capex is significant and that returns from newer KIVA ready-to-drink and alcobev ventures remain uncertain.
What to watch
Management said gross margin likely bottomed in the current quarter absent fresh macro shocks, and Jefferies India said India volume momentum continued into October. The company plans aggressive distribution expansion in CY27, reaching about 4.2 million outlets with roughly 200,000 additions a year, and has earmarked ₹1,000 crore of India capex plus $90-100 million for international capacity, Mint reported.
Investors should note that broker ratings and target prices are forward-looking views, not financial advice, and share prices and input-cost trends are uncertain and can move sharply.
Sources: BusinessLine, Mint
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