- Why is the revenue falling?
- Is the remaining business actually growing?
- Why doesn't Coca-Cola own the entire beverage business?
- Our Take
Hindustan Coca-Cola Holdings (HCCH), the holding company behind Coca-Cola's Indian bottling business, has filed its DRHP with SEBI for an IPO. The proposed IPO is entirely an Offer for Sale (OFS) of up to 99.75 crore shares by its promoter, Hindustan Coca-Cola Overseas Holdings Pte. Ltd. This means HCCH will not receive any money from the share sale.
But there is an interesting question hidden in the company's financial numbers. Its revenue fell 17.64% between FY24 and FY26, from ₹14,021.55 crore to ₹11,548.58 crore. Does this mean Coca-Cola's Indian bottling business is shrinking?
Not necessarily. A closer look at the territories it continues to operate in tells a different story.
Why is the revenue falling?
Imagine you own 16 cracker shops. You sell six shops to other owners, and your financial records now show sales from only the remaining 10 shops. Your total sales will naturally fall, even if the 10 shops you still own are selling more crackers than before.
Something similar happened at HCCH.
Over the last few years, the company transferred its bottling and distribution businesses in several territories, including Rajasthan, Bihar, Jharkhand, Northeast India, and parts of West Bengal, to other Coca-Cola bottlers.
This process is called refranchising. In simple words, Coca-Cola is transferring the responsibility of running bottling operations in certain territories to independent bottling partners.
As a result, HCCH's earlier financial statements included revenue from territories that are no longer part of its business. Its FY26 revenue therefore cannot be directly compared with FY24 revenue without considering these changes.
The company also recorded one-time profits from these business transfers, which affected its reported profits in FY24 and FY26. Therefore, investors should look beyond headline revenue and profit numbers to understand the performance of the continuing business.
Is the remaining business actually growing?
To understand HCCH's performance better, we need to look at its Retained Units, which cover the territories it continues to operate.
These units recorded sales volume growth from 658 million unit cases in FY24 to 684.6 million unit cases in FY26.
The growth became stronger in the June 2026 quarter:
- Sales volume increased 18.61% year-on-year to 249.2 million unit cases.
- Revenue grew 20.46% to ₹4,310.17 crore.
- EBITDA margin, excluding other income and exceptional items, improved to 17.20% from 13.76% a year earlier.
These numbers suggest that the retained business is growing despite the decline in the company's overall reported revenue.
The retained territories also account for approximately 38.53% of Coca-Cola India's concentrate sales and include five of India's eight largest metropolitan cities: Mumbai, Bengaluru, Hyderabad, Chennai and Pune.
This gives HCCH access to large urban markets with significant beverage consumption potential. However, one strong quarter does not guarantee that the same growth will continue throughout the year. Investors should watch whether the company can sustain this growth over time.
Why doesn't Coca-Cola own the entire beverage business?
There is another important point investors should understand before evaluating this IPO.
Coca-Cola's business is not limited to manufacturing and selling soft drinks. It owns the beverage brands, while bottling partners handle much of the physical work required to bring those drinks to consumers.
For example, when you buy a bottle of Thums Up or Sprite, two businesses are involved.
The Coca-Cola Company: It owns the brands and supplies the concentrate used to make the beverages.
HCCH: Through its operating subsidiary, Hindustan Coca-Cola Beverages or HCCB, it manufactures, bottles, and distributes the drinks.
HCCH operates 14 production facilities, supported by eight co-packing units. Its distribution network reaches approximately 1.7 million retail outlets.
But running this business involves significant costs. HCCH has to manage factories, packaging, sugar, transportation, electricity, warehouses, and distribution. It also pays for the concentrate supplied by Coca-Cola under its contractual arrangements.
This explains why a bottling business has different economics from a company that primarily owns beverage brands. Strong brand recognition does not automatically translate into equally high profit margins for the bottler.
Our Take
HCCH's falling revenue does not necessarily mean its continuing business is weakening. Territory transfers have changed the size of its operations, while its retained units have reported encouraging volume growth and margin improvement.
However, there are still important questions.
Can the company sustain growth in its retained territories? Can it improve manufacturing and distribution efficiency? And can it generate sufficient cash to fund its future expansion?
There is also an important IPO consideration. Since the proposed issue is entirely an OFS, the money raised will go to the selling shareholder rather than HCCH.
Ultimately, investors should not judge this IPO simply by the company's historical revenue decline or the popularity of Coca-Cola's brands.
The real test will be whether its retained bottling business can convert growing sales into sustainable profits and cash flows, and whether the eventual IPO valuation makes that opportunity attractive.