Varun Beverages Q1 CY26: profit up 20%, targets rise

Share price extends rally after results

Varun Beverages Ltd (VBL) shares traded higher on Tuesday, extending a rally that began immediately after the company reported its March-quarter (Q1 CY26) earnings. In early trade, the stock was quoted at ₹525.2, up 1.22%, after rising 5.8% in the previous session following the earnings announcement. At the time of writing, the stock was at ₹523.30, up 0.86%.

The move added to a strong short-term run. Over the past five trading days, the stock had risen 7.28%, and it had rallied about 36.24% over the last month. On a one-year basis, the stock was down 1.7%, broadly in line with the Nifty 50, which declined about 1% over the same period.

Q1 CY26 earnings snapshot: revenue, profit and margins

Varun Beverages reported a strong quarter ended March 31, 2026, citing demand across key markets. In exchange filings, consolidated profit after tax (PAT) rose 20% to ₹878 crore, compared with ₹731 crore a year ago.

Revenue from operations increased 18% to ₹6,721.5 crore, versus ₹5,680.0 crore in the corresponding quarter last year. The company also reported EBITDA of ₹1,528.9 crore, up 21% from ₹1,264 crore in the year-ago quarter. EBITDA margin improved by 55 basis points to 23.3%.

Gross margin also improved. The company said gross margins rose 62 bps to 55.2% in Q1 CY26, supported by early stocking of key raw materials despite an inflationary raw material environment.

Costs and EPS: what changed in the quarter

On costs, consolidated input costs increased 18% YoY to ₹3,152 crore, compared with ₹2,671 crore in the same period a year earlier. Despite higher costs, the margin expansion indicated improved operating leverage and a favourable product and pricing mix in parts of the portfolio.

Earnings per share (EPS) rose to ₹2.58 in the March quarter from ₹2.15 in the same period of the previous financial year, as per the consolidated financial statements cited in the filing-based report.

Volumes: India and international markets drive growth

Operationally, consolidated sales volumes rose 16.3% to 363.4 million cases. The growth was led by India volumes up 14.4% and international volumes up 21.4%.

Brokerage commentary referenced a strong start to the peak season. Jefferies cited a quarter supported by over 14% volume growth in India, while other notes pointed to demand trends and improved profitability visibility going into summer.

Interim dividend announced

Alongside the quarterly performance, the board recommended an interim dividend of ₹0.50 per equity share on April 27, 2026. The announcement came as part of the company’s disclosures around the quarter’s results.

Brokerages: mostly bullish, but split on valuation

Brokerages were largely positive after the print, pointing to demand trends, volume momentum and improving visibility on profitability. At the same time, multiple reports highlighted that analysts are split on valuation comfort.

Emkay Global maintained a Buy rating and set a target price of ₹620, implying an upside of about 19.5% from the levels referenced in the report. Emkay also noted VBL’s margin position relative to peers, citing strategic stocking of PET and lower discounting in a strong demand environment.

HSBC maintained a Hold rating with a target price of ₹600, pointing to a strong start to the year and expectations of healthy demand during the summer season in India. Jefferies retained a Buy with a target of ₹615.

Other brokerage targets cited included Elara Capital Buy at ₹560 (raised from ₹535) and ICICI Securities Hold at ₹500 (raised from ₹450). Separate market commentary also referenced Ambit Capital’s target of ₹501.

Key numbers at a glance

Technical levels and volatility markers cited

Separate market commentary included short-term technical markers. Jigar S Patel from Anand Rathi cited support at ₹400 and resistance at ₹420, adding that a decisive move above ₹420 may trigger a further upside to ₹435, with an expected trading range between ₹400 and ₹435 in the short term.

In the same commentary, the stock’s RSI was 42.5, suggesting it was neither oversold nor overbought, while the one-year beta was 0.7, indicating relatively low volatility over the period.

Business context: PepsiCo bottling franchise model

Varun Beverages operates as a franchisee of PepsiCo and produces and distributes carbonated soft drinks and a wider set of non-carbonated beverages, including packaged drinking water sold under PepsiCo-owned trademarks. The company’s quarterly performance and brokerage commentary were framed around distribution reach, new launches, and international scaling, alongside margin management through inventory planning.

What investors will track next

The near-term focus remains on sustaining volume momentum into the summer season, managing input costs, and maintaining margins as competitive intensity and discounting remain key discussion points in brokerage notes. Investors will also track how the stock reacts to valuation debates even as multiple brokerages maintain positive ratings and targets.

In the immediate term, the next set of management commentary and subsequent quarterly updates will be important for assessing whether the current volume-led growth and margin trajectory can be maintained while the company executes on expansion priorities across markets.