Varun Beverages Q1 Review - Sustained Volume Growth: ICICI Securities

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ICICI Securities Report

Organic volume growth of 25% year-on-year (two-year compound annual growth rate of 12%) in Q1 CY21 looks impressive.

Recovery in economy, normalisation of consumption and sustained higher in-home consumption were key reasons for strong volumes in Q1 CY21.

Three pointers:

1. We believe when the business activity returns to normalcy, some consumers will still continue with higher in-home consumption. This opens up new window of beverage consumption.

2. The company has initiated multiple cost saving programmes and some of the savings are likely to be structural in nature.

3. Rural is still outperforming the urban and is likely to continue to do so as the impact of lockdown is still minimal in rural.

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