United Spirits Ltd share Price Today

The share price of United Spirits looks lucrative at current juncture, as it is undergoing a higher base formation after arresting secondary correction in the vicinity of breakout area of 7 years contracting triangle placed at ₹ 800, indicating change of polarity. Thereby, offering fresh entry  opportunity with a favourable risk reward
 
The stock has logged a resolute breakout from three months falling channel and sustaining well above past two weeks high, backed by rising volumes, indicating conclusion of corrective bias
 
Key point to highlight is that, past eight months consolidation appears to be forming a double bottom formation, signifying bullish reversal on the cards
 
We expect, the stock to regain upward momentum and head towards ₹ 848 levels as it is 50% retracement of past three months decline (₹ 952-730)
 
Among oscillators, the weekly RSI recorded bullish crossover, indicating positive bias

United Spirits (USL) is India’s leading alcoholic beverage company and subsidiary of global leader Diageo plc. It manufactures, sells premium liquor brands such as Johnnie Walker, Black Dog, Black & White, Vat 69, Antiquity, Signature, Royal Challenge, McDowell’s No 1, Smirnoff and Captain Morgan
 
Prestige and above segment comprises 80% of its volumes
 
It aims to grow its revenues in double digits and expects its operating margin to remain in mid to high-teen levels in the medium term
 
Although inflation continues to remain strong in the near to medium term, USL continues to revamp its existing premium portfolio, introduce newer brands, control costs and seek price hikes from states. Delhi RTM one-offs are expected to continue till next two quarters.
 
USL has commenced on a multi-year supply chain agility program, which has a potential for cost control in the tune of ₹130-150 crore per annum. The program would require investment of ₹500 crore (cash:non-cash = 60:40 ratio). Benefits would start flowing from CY24 end and will have a 4-4.5 year payback period
 
Newer launches and brand extensions in the upper prestige and introduction of international brands from the Diageo stable, will help drive higher asset turnover
 
Favourable regulatory environment (lower customs duty, higher distribution, composite shops, etc) in several states coupled with USL debt free status, double-digit return ratios & strong cash generation, augurs well for continued investments in brand portfolio and which in turn leads to better profitability
 
We expect USL to deliver revenue and EBITDA CAGR of 11% and 7%, respectively, over FY22-25E. PAT is likely to grow at 16% CAGR over the same period. Increase in profitability with strong asset turnover is expected to result in healthy return ratios over FY23-25E

Breweries & Distilleries company United Spirits announced Q2FY24 & H1FY24 results:

• Consolidated Q2FY24:

  • Net sales at Rs 2,867 crore, up 12.0% on rebased prior year comparators, in line with growth in the standalone business.
  • EBITDA was at Rs 467 crore, a growth of 21.4% on rebased prior year comparators.
  • Profit after tax was at Rs 339 crore
• Consolidated H1FY24:
  • Net sales for H1FY24 were at Rs 5,535 crore, up 19.5% on rebased prior year comparators. This was led by the strong growth in the standalone business and the new five-year media rights cycle (2023-27) for the Indian Premier League starting from Q1FY24.
  • EBITDA for H1FY24 was at Rs 1,180 crore, a growth of 69.7% on rebased prior year comparators.
  • Profit after tax was at Rs 816 crore

Hina Nagarajan, CEO & Managing Director, commenting on the Q2FY24 performance, said, “We have maintained the growth and margin momentum in the second quarter of fiscal 2024 on the back of sustained investment in our brands and proven productivity muscle. Continuing our future-back consumer focus approach, we have now brought our global Tequila trademark Don Julio to India. This is in line with our strategy & commitment to bring the best from around the world to our aspiring Indian consumers. We are optimistic about the India potential of this opportunity in line with global trends.

I am also delighted to inform you that the Board of Directors has approved an interim dividend of Rs 4.0 per share. This is after a long hiatus, enabled by the successful turnaround of the Company to sustained profitability. We take the opportunity to thank our long-term investors for their patience and commitment.

Looking ahead, our priority is to sustain the growth momentum and realise the full potential of our portfolio offerings. While inflationary headwinds remain challenging, we remain focussed on revenue growth management & value chain productivity in our quest of long-term value creation for all our stakeholders.”

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