Pepsi India bottler Varun Beverages reported a nearly 77% surge in its quarterly profit on Monday, as it saw double-digit volume growth across domestic and international markets even as higher costs of essentials weighed on consumers.

Varun Beverages Q4 profit: Consumers in cities with higher average incomes, compared with their counterparts in the hinterlands, have helped.

Consolidated net profit rose to 1.32 billion rupees ($15.9 million) for the fourth quarter ended Dec. 31, compared with 747.5 million rupees in the year-ago period.

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Consumers in cities with higher average incomes, compared with their counterparts in the hinterlands, have helped makers of packaged goods pull in massive sales, even in the face of higher prices of essentials.

The Gurugram-based company, with operations across six countries, is one of PepsiCo’s largest franchisee outside the United States, and packages and distributes beverages under Pepsi, Mirinda and Tropicana labels.

Varun Beverages said in its investor presentation that it saw a 21% surge in its revenue from operations at 27.31 billion rupees in the reported period, and also an upbeat volume growth.

The cost of raw materials, which include flavored concentrate, packaging material and sugar, edged 1.8% higher during the quarter.

Varun Beverages’ earnings before interest, taxes, depreciation and amortisation (EBITDA) margin expanded to 15.7% from 13.9% a year earlier, aided by softer packaging costs amid an uptick in sugar prices.

Last year, the firm announced its foray into the South African markets with the acquisition of The Beverage Company, which analysts expect will aid the Indian bottler.

Additionally, Varun Beverages approved a final dividend of 1.25 rupees per share for the financial year ended Dec. 31.

Shares of the company, which rose more than 30% during the December quarter, were trading flat after the results.

Pepsico Inc is due to report quarterly results on Feb. 09.



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