VBL shares bounce back after mixed earnings, but can India volume growth hold up? | Stock Market News

Varun Beverages (VBL) shares recovered slightly on Wednesday, rising 4% after plunging over 7% Tuesday following lacklustre June-quarter (Q2CY26) results. VBL, one of PepsiCo's largest franchise bottlers, follows a January-December financial year.

Lower-than-anticipated volume growth of 14.4% in the high-margin India business was at the core of these disappointing results, prompting earnings downgrades for CY26/CY27. Analysts had estimated around 20% volume growth, given last year’s low base. But adverse weather conditions due to El Niño hurt volumes in April. Softness in the India business was offset by robust international operations, where volumes rose 38.4%. Consolidated volume grew 19.8% to 466.7 million cases and revenue rose 20% to ₹8,451 crore in Q2CY26.

Despite rising competition, VBL remains confident of delivering double-digit volume growth in India this year. Management noted that monthly volume growth stayed above 20% throughout the peak summer beverage season, which began in March, except for a brief slowdown in April.

Seasonality is also an issue here as a significant portion of revenues and profits are realized in the first half of the year. Brokerage house Citi noted that the second half contributes just 35% of annual volumes, leaving investors to debate whether VBL’s growth trajectory has structurally slowed amid rising competition in India.

To drive growth, VBL is betting on new categories such as value-added dairy, juices and hydration. In H1CY26, the share of low-and no-sugar products was around 73% of consolidated volumes, aiding portfolio diversification and margin.

Meanwhile, VBL’s international operations were supported by the Twizza integration and decent demand across African markets, with all geographies except Zambia delivering healthy growth. However, a consolidated Ebitda margin drop of 76 basis points to 27.7% dampened sentiment. Margins were hurt by the consolidation of the low-margin Twizza business, increased staff costs, and higher depreciation due to commissioning of new plants in India.

The stock gained 17% since hitting a 52-week low of ₹381 last month, and trades at 37 times estimated FY27 earnings, according to Bloomberg data. From here on, all eyes will be on whether the company can sustain double-digit volume growth in India.

Harsha Jethmalani is a Deputy Editor at Mint with over a decade of experience covering stock markets and corporate India. As a key member of the Mark to Market team, she specializes in delivering cutting-edge commentary on market trends, the economy, and corporate financial reports.<br><br>Born and raised in Mumbai, Harsha’s entry into business journalism was a serendipitous pivot. Graduating during the 2008–2009 financial crisis, her initial goal of becoming a research analyst at an MNC was rerouted. However, what began as a chance career move quickly became a conscious choice; she discovered that financial journalism is a powerful storytelling tool capable of influencing and empowering the financial decisions of a massive audience.<br><br>Harsha began her career in 2009 at IRIS Business Services (Myiris.com), tracking mutual funds and interviewing fund managers. In 2011, she joined the Network18 Group, writing extensively on equity market trends for Moneycontrol.com and hosting pre- and post-market audio updates. Following a stint covering personal finance at Dalal Times, she joined Mint in 2016 as a Content Producer, steadily rising through the ranks to her current editorial position.<br><br>A defining highlight of her tenure at Mint was her extensive coverage of India's historic Goods and Services Tax (GST) reform. She chronicled the massive indirect tax overhaul from its initial conceptual and execution hurdles to its eventual streamlining. Her impactful reporting earned official recognition when her article exposing a spike in gold smuggling ahead of the GST rollout was formally acknowledged by the Office of the Director General of Audit (Central), Kolkata. Currently, Harsha closely tracks the IT, cement, real estate, and paint sectors. Her sharp news sense and ability to spot emerging trends consistently bring fresh, actionable perspectives to market analysis.<br><br>She holds a postgraduate degree in financial markets from Indira Gandhi National Open University and a Bachelor of Management Studies from Vivekanand Education Society, Chembur, Mumbai.

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