Thread by @arunkumar_cms

Varun beverages has been a wealth creator from the time of its listing and is one of the high growth #FMCG companies. I have been following this business and as @ishmohit1 from @soicfinance says, start from the easier business and build on the knowledge.. This is my first
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business study and I enjoyed the process. Now, I know what to track in this business and what are the expectations and definitely have more conviction on this. Here is what I learned from its latest concall and few other sources. Please bear with me as I am new to this
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1. In Q3 CY2022 VBL presented awesome results with revenue growth ~ 32%, PAT growth ~ 53% and Volume growth ~ 22%. (All numbers are YOY). Volume growth is mostly driven by Sting.
2. Sting (value energy drink) is helping in bringing the realisations higher to Rs 167/case
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2. (6.8% growth). One more reason for this higher realisation is higher mix of smaller SKUs (250 ml)
3. Gross margins at 53.7% and EBITDA margins ~ 22% (best in the world in this business). Guidance is to keep margins 20%-22%
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4. Sales split : 70% from Carbonated Soft drinks (CSD), 25% from water and 5% from juice.
5. Debt was reduced to 2300 Cr from 3000 Cr.

Runway for Growth :
1. Entering into snacks in Morocco from Jan 1, 2023. Currently, 150 Cr business. No manufacturing yet.

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2. Republic of Congo and Zimbabwe are other African countries where they are active. Will increase slowly the operations there.
3. New capacity in MP and Rajasthan coming up (1300 Cr capex) which will increase the overall capacity of CSD by ~ 20%.

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4. Strong demand and 100% capacity utilisation. More capex needed to get more facilities.
5. Dairy products (VBL brand) sales picking up. More capacity to be added in H2 CY2023.
6. Adding 40k-50k chilling equipments each yr. Current reach to 3M dealers, tot dealers r 11M.
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6. Adding 10%-12% dealers per year. Carrying size for dealers also increasing by 5%-7%.
7. Recent high growth can be sustained based on the opportunity size of Indian market, upcoming African market and foraying into new products like Dairy products and Snacks.

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Underlined comments from Management :

1. Double digit growth guidance for next 3-5 years and beyond.
2. Competition from Coca-Cola and Reliance will be healthy. Market is big enough to accommodate many players.
3. Strong demand, not enough supply so more capex needed.

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4. Margins to be kept in range of 20%-22%.
5. No private label production.
6. Africa provides opportunity. Morocco snacks business will be an experience.
For me, its a high growth company which technically is in Stage 2. I m riding its growth and will add more in dips.
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Keep tracking the volume growth and capex numbers. Look for the effect of competition.

Please RT if you find it useful. Thank you 🙏

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@LearningEleven @itsTarH @Finstor85 @sahil_vi @ishmohit1 @soicfinance