- 31 Jul 2023
- ICICI Securities
UBL GROSS MARGINS SHOW SIGNS OF IMPROVEMENT
UBL - 1995 Change: -36.10 (-1.78 %)News: UBL Q1FY24 net revenues de-grew 7% to Rs 2273 crore, led by 12% de-growth in volumes. However, volumes de-grew mere 4% excluding RTM changes in Telangana and Haryana. EBITDA margins contracted 110 bps YoY to 9.8% (but improved 680 bps QoQ) led by 370 bps contraction in gross margins (but improved 200 bps QoQ). Subsequently, absolute EBITDA/PAT de-grew 16% to Rs 223 crore/Rs 136 crore respectively.
Views: UBL peak summer quarter were impacted due to capacity constraints in Telangana (due to high demand). UBL gross margins were impacted due to high cost barley inventory, which is soon expected to be replaced by relatively higher yield inventory (which would improve margins further). Key trigger to watch out for is the timeline for replacement with the new crop. UBL next peak season (Apr-Jun FY25) would face General elections and thereby risk supply disruption, next year too.
Impact: Neutral