The PepsiCo bottling major Varun Beverages had hoped to add value-added dairy drinks to its South African business this year. A deal signed in March was meant to do exactly that, but it did not clear the finish line by the date both sides had set. The company has now written to the exchanges explaining where things stand, what it could stand to lose, and who will settle the disagreement.
Shares of Varun Beverages Ltd are trading at Rs. 421.00, down 2.57 percent on Thursday. The stock touched the intraday high of Rs. 430.80 after opening at Rs. 428.00 before slipping to a low of Rs. 420.90. The company commands a market capitalization of Rs. 1,42,318.46 crore.
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Crickley Dairy purchase stalls after the long stop date passes
Varun Beverages has told the stock exchanges that its planned takeover of Crickley Dairy in South Africa is now in the hands of arbitrators. According to the September 30 filing, a condition precedent attached to the deal was still unmet when the long stop date arrived that same day, so the matter has gone to The Arbitration Foundation of Southern Africa (AFSA). On March 17, the company’s South African arm, The Beverage Company Proprietary Limited, had agreed to buy all of Crickley from Clark Holdings at an enterprise value of ZAR 238 million, or roughly Rs 131.47 crore. The filing names Crickley and Clark Holdings as the opposing parties and refers to termination of the agreement. Varun says any loss it faces is capped at the acquisition cost.
A small financial risk, but a setback for the dairy plan
In money terms, this is a minor matter for a group of Varun’s size. The worst case of Rs 131.47 crore is about 0.6 percent of the Rs 21,952 crore in total equity shown on the June 30, 2026 balance sheet. The deal never closed, so Crickley added nothing to the June quarter numbers. The filing doesn’t say whether Varun expects to pay compensation, and it puts no figure on the claims, so the real outcome will depend on how the AFSA proceedings go.
The strategic cost is probably larger. Crickley would have given Varun a plant in Queenstown making value-added dairy and juice drinks. The company is chasing the same category through other routes: the CALPIS franchise with Asahi, the CreamBell licence for dairy-based beverages, and the agreed purchase of the Devyani Food Industries business in Kenya. Consolidated net debt is only about Rs 373 crore, and the CRISIL AAA/Stable rating is intact, so Varun can afford to look for another target if it wants one.
Financial Performance
Looking at the quarterly results of Varun Beverages Limited, the company’s consolidated revenue from operations increased by 20.8 percent YoY, from Rs. 7,163.02 crore in Q2 CY25 to Rs. 8,650.57 crore in Q2 CY26, and grew by 28.7 percent QoQ from Rs. 6,721.54 crore in Q1 CY26.
Varun Beverages Limited generated 96.8 percent of its net revenue from beverage sales and 3.2 percent from non-beverage sales in Q2 CY26.
In Q2 CY26, Varun Beverages Limited’s consolidated net profit increased by 15.1 percent YoY, reaching Rs. 1,525.36 crore compared to Rs. 1,325.49 crore during the same period last year. As compared to Q1 CY26, the net profit has increased by 73.6 percent, from Rs. 878.71 crore.
The basic earnings per share increased by 15.7 percent and stood at Rs. 4.50 as against Rs. 3.89 recorded in the same quarter in the previous year, CY2025.
Packaged drink demand is holding up, but input costs and currencies need watching
The broader picture for beverage makers is still encouraging. Management points to a young population, rising incomes and a steady move toward packaged drinks as the main long-term drivers in India and its African markets. Varun’s own volumes grew 19.8 percent in the June quarter, so demand is plainly there. Two risks stand out. Raw material prices remain high, and the company has leaned on early stocking and a bigger share of low-sugar products to protect margins. Currency swings also matter more as the group expands abroad, because a deal like Crickley is priced in rand and its rupee value moves with the exchange rate. One stalled acquisition won’t change the growth story, but it is a reminder that buying across borders brings regulatory and timing risk.
Company Overview
Gurugram-based Varun Beverages Limited is among the largest PepsiCo bottlers outside the United States. It makes and sells carbonated soft drinks, juices, packaged water and energy drinks from 53 plants, 38 of them in India and 15 overseas. The company holds franchises in 10 countries and distribution rights in four more, and it also makes snacks in parts of Africa.