# 1. Financial Performance ## A. Key Figures * Revenue from Operations: ₹216,853.8 Mn (~₹21,685 Cr) (CY2025) (+8.4%) * Gross Margin: 55.2% (CY2025) vs. 55.5% (CY2024) * EBITDA: ₹50,493.7 Mn (₹5,049.37 Cr) (CY2025) (+7.2%) · ₹6,392.6 Mn (Q4 CY2025) (+10.2%) * EBITDA Margin: 23.3% (CY2025) vs. 23.5% (CY2024) * Net Debt Position: Net debt-free in India with ~₹12,250 Mn free cash · Consolidated net debt: ₹256 Mn ## B. Revenue Growth * **Steady Volume-Led Expansion:** Revenue growth aligned with stable volume recovery, with international sales benefiting from **currency tailwinds** and operational improvements expected to yield visible gains this year. * **Resilient Performance Amid Volatility:** Despite two soft quarters, full-year volumes delivered positive growth, supported by strong performance in Q1 (~15%–16%) and recovery in Q4. ## C. Profit Margins * **Margins Under Pressure Group-Wide:** Despite top-line growth, gross and consolidated EBITDA margins declined year-on-year due to cost impacts from **four new plant additions**, though operating leverage improved in Q4. * **India Margin Strength:** India standalone EBITDA margin reached a record **~26%**, highlighting operational excellence and pricing resilience despite a volume-value gap. * **PAT Growth Drivers:** Bottom-line expansion driven by volume recovery, **lower finance costs**, and **higher other income** from interest and favorable forex movements. ## D. Balance Sheet * **Fortress-Like Financial Position:** Strong cash flows supported a net debt-free India business and negligible consolidated net debt, providing strategic flexibility. * **Credit Quality Recognition:** CRISIL upgrade to **AAA/stable** underscores robust balance sheet strength and sustainable cash flow generation. --- # 2. Volume & Pricing Trends ## A. Key Figures * Domestic Volumes: +10.5% Q4 YoY * Consolidated Sales Volumes: 1,213.1 million cases CY2025 (+7.9%) · 237.1 million cases Q4 CY2025 (+10.2%) * Net Realization per Case: ₹177.3 (+3.4%) Q4 CY2025 · ₹178.8 (+0.5%) FY CY2025 ## B. Domestic Volume * **Resilient Growth:** Domestic volume expansion sustained at 5% despite adverse weather, underpinned by strong brand equity and distribution reach. * **Mix Pressure:** Value growth lagged volume due to **product upsizing** and **discounting**, resulting in a negative mix impact and gross margin compression of 30–40 bps. * **Strategic Upsizing:** Transition to 400 ml packs completed in Q4, enhancing volume metrics and operating leverage, with minimal cost pass-through due to limited base exposure (**10–12% of CSD**). ## C. International Volume * **Robust International Expansion:** Africa volumes rose 10% in Q4 on expanded distribution and capacity investments, supporting consolidated growth. * **Volume Definition Clarity:** Snacks excluded from international beverage volume reporting, with no material impact on reported trends. ## D. Realization per Case * **Pricing Momentum:** Net realization improved 4% in Q4 driven by international markets, with further gains expected in CY2026 from new plants in **Morocco** and **Zimbabwe**. * **Discounting Easing:** Reduced liquidation and promotional intensity compared to prior periods, supporting stabilization in realization trends. * **Targeted Value Packs:** Rs. 10 pack launch remains limited to **5–7% of portfolio**, with negligible margin impact even if mix rises to **5% of sales**. ## E. Pack Size Impact * **Upsizing Over Discounting:** Management prioritized pack upsizing over price cuts to preserve brand value and long-term volume growth, mitigating competitive pressures. * **Full Rollout Achieved:** All pack size changes implemented in Q4, with no further changes anticipated, ensuring stable comparables going forward. --- # 3. Product & Segment Performance ## A. Key Figures * CSD & NCB Mix: 73.9% and 5.9% of total volume · Packaged Water: 20.2% of total volume * **Snacks Revenue:** **₹340 Cr** (CY2025) · **Intl. Foods Revenue:** **₹250–300 Cr** range * **Sugar-Free Share:** **~59%** of consolidated volume (CY2025) ## B. Segment Mix & Expansion * **Limited Exposure to CSD/NCB:** Both CSD and NCB represent minor volume shares, indicating minimal strategic reliance on these categories. * **Snacks Scaling Internationally:** Snacks expansion gaining traction in Africa and Morocco, with revenue contribution remaining small but growing. ## C. New Product Launches * **Targeted Entry in Value Segment:** ₹10 portfolio launched surgically in East/Northeast India; no broad rollout planned amid cautious scaling. * **Summer Innovation Push:** Energy drink category to see flavor expansions and **Ad Rush** scaling, backed by **PepsiCo’s ATL marketing** during peak season. * **Nimbooz Line Extension:** **Nimbooz Jeera** launch planned, building on strong performance of core brand and intent to broaden flavor and price ladder. ## D. Sugar-Free & Regulatory Advantage * **Health-Focused Portfolio Dominance:** Clear leadership in low/no sugar offerings, with **nearly 60% of volumes** aligned to health trends and regulatory shifts. * **Margin Tailwinds from GST Benefit:** New **juice-based Nimbooz variants** attract **5% GST** (down from 40%), significantly boosting margin potential. * **Resilient Profitability Transition:** Company’s sugar-free preparedness limits profitability impact to **under 10%**, outpacing peers. --- # 4. Capacity & Manufacturing ## A. Key Figures * **CAPEX:** **~₹4,500 Cr** capitalized in CY2025 · **~₹1,650 Cr** incurred in CY2024 * **Capacity Growth:** **40%–45%** cumulative increase over past two years * Depreciation: +28.4% during the year * **Employee Benefit Expenses:** **+22% YoY** in Q4 ## B. Greenfield Plants * **Strategic Expansion:** Greenfield and backward integration facilities are stabilizing, enhancing volume capacity and operating leverage ahead of next season. * **Africa Entry:** Carlsberg launch in Africa underway, with first greenfield plant under construction and expected to be operational by end of next year. ## C. Capacity Utilization * **Ample Idle Capacity:** Current utilization remains low, with 50% more capacity available than utilized; over 20% additional capacity added this year remains underutilized. * **Limited Operational Data:** Too early to assess new market manufacturing performance—only Morocco has six months of data; Zimbabwe’s plant commissioned just two weeks ago. * **Scalable Footprint:** Expanded capacity now available for deployment; future expansions likely in faster-growing territories based on seasonal volume performance. ## D. CAPEX Spend * **Major Investment Phase Concluded:** Bulk of CAPEX directed toward greenfield sites in Prayagraj, Buxar, Damtal, and Mendipathar (~₹1,700 Cr), with international spend (~₹1,300 Cr) on PET lines, snacks, and can lines in Africa. * **Minimal Domestic Outlay Ahead:** No major CAPEX planned in India for CY2026 due to sufficient capacity; domestic spending to remain very low. * **Targeted Overseas Spend:** Focus shifts to South Africa for single brownfield expansion, though overall international CAPEX will be modest. * **High Cash, Low Payout:** Significant cash reserves held with no major upcoming CAPEX and no dividend increase, leaving room for strategic deployment. ## E. Depreciation Trend * **Modest Depreciation Rise:** 4% increase driven by commissioning of new greenfield plants in India and brownfield expansions abroad. --- # 5. Distribution & Supply Chain ## A. Route Expansion * **Strategic Opacity:** Management refrains from disclosing specific distribution metrics to avoid providing competitive advantage, though confirms active expansion efforts. * **Market vs. Manufacturing Dynamics:** Emphasized that distribution success in a new market is distinct from local manufacturing, with reliable performance feedback anticipated within a few quarters. * **CY2025 Expansion Achieved Amid Rural Challenges:** Distribution footprint grew as planned, but rural outlet throughput lagged due to slower-than-expected adoption despite improved infrastructure and reach. * **CY2026 Expansion on Track:** Further route expansion planned for CY2026, backed by infrastructure investments, with **increased offtakes expected as the season progresses**. ## B. Visi-Cooler Deployment * **Ongoing Channel Support:** Company continues deploying additional visi-coolers and expanding routes to strengthen on-ground presence and drive sell-in momentum. --- # 6. M&A & Strategic Initiatives ## A. Key Figures * **Revenue Base (International Foods):** **₹250–300 Cr** * **Capacity Increase (South Africa):** **70%–80%** via Twizza acquisition * **Expected Regional Growth (Africa):** **80% or higher** (combined organic & inorganic) ## B. Twizza Acquisition * **Strategic Expansion:** Proposed acquisition of Twizza adds **3 integrated manufacturing facilities**, enhancing footprint, route-to-market, and synergy potential in Africa’s largest soft drink market. * **Growth Catalyst:** Twizza deal is central to international CAPEX and expected to drive **robust double-digit growth** in Africa this year through scale and integration. * **Capital Allocation:** Part of capital spend will fund Twizza integration and **new brewery setup in Africa**, signaling long-term commitment to the region. * **Regulatory Status:** Transaction awaits Competition Commission approval; **Twizza’s EBITDA margin remains undisclosed** pending clearance. ## C. Carlsberg Launch * **Alcoholic Beverages Entry:** Africa-focused Carlsberg initiative requires **minimal near-term CAPEX**, with plans to establish **one plant** as part of limited initial rollout. * **Geographic Focus:** Alcoholic beverages strategy is **entirely outside India**, with Carlsberg in Africa as the flagship project; other opportunities under review. --- # 7. Risks & Margin Pressures ## A. Labour Code Costs * **One-Time Cost Absorption:** Incremental expenses from the new labour codes and a 30-year celebration event were fully absorbed in the quarter, with both impacts confirmed as **one-time** in nature. ## B. Tax Mismatches * **Elevated Ex-India Taxes:** Higher tax outflows tied to Zimbabwe entering a taxable bracket, eliminating prior incentives, led to a near 100% effective tax rate on ex-India profits this quarter. * **Structural Tax Volatility:** International tax mismatches may persist due to inability to offset cross-border losses, though the **overall international tax rate remains below India’s**. ## C. Input Cost Volatility * **Near-Term Margin Pressure:** Marginal realization decline attributed to seasonality, low volume growth, and start-up costs from **four new plants commissioned in 2025**, expected to contribute positively from this year onward. --- # 8. Guidance & Outlook ## A. Key Figures * **Margin Guidance:** **22%–23%** for CY2026 · **>21%** consolidated margin guided for CY2025 * **Growth Outlook:** **Double-digit** growth target maintained · **Mid-teens** potential · **High teens or higher** in new markets ## B. Volume Growth Trajectory * **Resilient Growth Path:** Double-digit volume growth remains achievable in CY2026, supported by easier prior-year comparables and **improved seasonal conditions** expected in peak quarters. * **Base Dynamics:** Recent low-season growth at **10%** reflects normalization, while upcoming quarters benefit from **favorable base effects** following prior-year weather disruptions. * **New Market Upside:** Expansion into new geographies seen as a key growth vector, with potential for **high-teens or higher growth rates** as scale builds. ## C. Margin & Profitability Outlook * **Stable Margin Guidance:** Management expects margins to hold near current levels in CY2026, underpinned by **operating leverage** and volume recovery, despite conservative official guidance. * **International Margin Convergence:** Overseas EBITDA margins have stabilized and are expected to **approach Indian levels within the next couple of years**, accelerated by backward integration and cost initiatives. * **Currency Tailwinds:** Operational cost dynamics to improve from this year onward due to **currency benefits in Africa**, driven by inventory cycles of **3–4 months or longer**. ## D. Strategic & Seasonal Drivers * **Capacity Utilization:** Added capacities expected to be fully utilized starting **Q2 of next fiscal year**, contingent on demand pickup. * **Long-Term Growth Foundation:** Sustainable growth underpinned by **diversified portfolio**, **expanded cold chain**, and **strong distribution**, with seasonality a key consideration in quarterly interpretation. * **Capital Returns:** Dividend increases remain on the table if business performance strengthens and operating conditions remain favorable.