Source: Delta revenue poised to soar on US$120m capex blitz – herald
Nelson Gahadza
Stockbroking firm IH Securities sees stronger revenue growth for Delta Corporation in the financial year (FY2027), driven by strong consumer demand and a US$120 million capital investment programme.
Delta’s investment is aimed at expanding production capacity across key business units.
In its earnings review of Delta’s financial results for the year ended March 31, 2026, IH Securities said the beverage giant’s record performance in FY2026 reflected genuine operational momentum, positioning the company for another year of growth as new capacity projects begin to come on stream.
The brokerage forecasts Delta’s revenue will increase to US$1,31 billion in FY2027 following the group’s historic achievement of US$1,09 billion in revenue in FY2026, the first time Delta breached the billion-dollar threshold.
According to IH Securities, the projected growth will be underpinned largely by investments to address supply shortages in the lager beer segment, where demand has consistently exceeded available production capacity.
“The FY27 capex programme of US$120 million is a direct and necessary response to larger demand that has consistently outstripped available supply,” IH Securities said.
The investment programme will focus primarily on expanding lager beer production capacity at the Belmont and Southerton plants, with the additional output expected to start contributing during the second half of FY2027.
IH Securities believes the capacity expansion projects will not only support higher sales volumes but also improve operating efficiencies over time as fixed costs are spread across increased production levels.
“The addition of meaningful larger capacity will carry a positive operating margin impact as fixed costs are leveraged over higher volumes, with full benefits expected to materialise in FY28,” the report noted.
The analysts expect earnings before interest, tax, depreciation and amortisation (EBITDA) margins to temporarily settle around 21,5 percent in FY2027 due to supply chain pressures linked to the Middle East conflict.
This has spawned an estimated 30 percent increase in fuel costs, but IH projects a recovery after 2027, as efficiency gains from the new investments take effect.
IH Securities said Delta remains financially well-positioned to fund its expansion programme internally, supported by robust cash generation and minimal debt exposure.
Operating cash flows for the year rose to US$162 million, while cash reserves stood at US$56,8 million. Long-term debt remained negligible at just US$180 000.
“This provides sufficient internal funding capacity, eliminating any need for dilution or new debt issuance,” IH said.
The analysts added that Delta’s strategic consolidation of Schweppes Zimbabwe further strengthens the group’s long-term growth prospects by broadening its beverages portfolio.
IH Securities described the transaction as well-timed and attractively priced at approximately 0,9 times the book value compared to a peer median valuation of around 4,0 times price-to-book.
The firm said management is targeting stronger operational performance from Schweppes starting from FY2027 following the restoration of full manufacturing capability.
Delta delivered strong volume growth across most of its businesses during FY2026, supported by a relatively stable operating environment characterised by exchange rate stability, increased dollarisation, firm commodity prices and resilient consumer spending.
Lager beer volumes increased 19 percent year-on-year to 3,15 million hectolitres, with demand consistently outstripping supply throughout the period.
Sorghum beer volumes also rose 19 percent to 4,62 million hectolitres, surpassing the previous historical peak of 4.58 million hectolitres recorded in FY1998.
Sparkling beverages volumes grew 14 percent to 2,24 million hectolitres after Delta absorbed the impact of the sugar surtax to maintain affordable pricing, while Schweppes volumes increased 21 percent to 915 000 hectolitres following improvements in manufacturing capacity.
African Distillers recorded one of the strongest performances in the portfolio, with volumes surging 50 percent year-on-year to 278 000 hectolitres as competition from grey market imports eased.
Regionally, South African operations recovered modestly following the revival of the KwaZulu-Natal brewery, while Zambia remained under pressure with volumes declining 27 percent year-on-year.
Despite the positive outlook, IH Securities cautioned that several risks remain, including the unresolved US$78,3 million tax assessment dispute with the Zimbabwe Revenue Authority (ZIMRA) and the continued impact of the US$30 million sugar surtax on non-alcoholic beverages.
However, the brokerage noted that no further tax assessments are expected and discussions with authorities remain ongoing.
The post Delta revenue poised to soar on US$120m capex blitz appeared first on Zimbabwe Situation.