United Spirits rallies 7%; hits record high on healthy Q1 performance

In Q1FY24, the company's EBITDA jumped 84 per cent YoY to Rs 385 crore, margins expanded 638 bps to 17.7 per cent.

Shares of United Spirits hit a record high of Rs 1,041.50, as they rallied 7 per cent on the BSE in Friday’s intra-day trade in  an otherwise weak market after the company reported a healthy operational performance in June quarter (Q1FY24).

The stock of breweries & distilleries company surpassed its previous high of Rs 982.30 touched on July 18.  In comparison, the S&P BSE Sensex was down 1 per cent at 66,920 at 10:55 am.

Inspite of continued raw material inflation, United Spirits’ gross margins during the quarter expanded 140 bps, primarily driven by higher premiumisation. The company’s standalone Q1FY24 revenues grew 17 per cent year-on-year (YoY) to Rs 2,172 crore, while profit after tax (PAT) rose 22 per cent YoY at Rs 238 crore. The company’s earnings before interest, taxes, depreciation, and mortization (EBITDA) jumped 84 per cent YoY to Rs 385 crore, margins expanded 638 bps to 17.7 per cent.

While inflationary pressures remain, the company’s strategy to reshape the portfolio combined with revenue growth management and focus on everyday efficiency is driving sustainable growth across the Prestige & Above segment, the management said.

Meanwhile, at the consolidated levels, revenues grew 29 per cent led by higher standalone revenues and significant increase in revenues from Indian Premier League (IPL).

United Spirits is one of the leading beverage alcohol companies in India and a subsidiary of global leader Diageo plc. The company is engaged in the business of manufacture, purchase and sale of beverage alcohol and other allied spirits, including through tie-up manufacturing units and through strategic franchising of some of its brands.

In addition, the Group holds perpetual right to the Royal Challengers Bangalore (RCB) cricket franchise of IPL and has also recently acquired franchise rights for the Women’s Premier League (WPL) in January 2023.

The growing & rapidly premiumising Total Beverage Alcohol (TBA) industry as well as new post-Covid consumer trends and emerging consumer cohorts are expected to further drive premiumization in the category. These present an opportunity to accelerate top-line growth and drive share gains in attractive profit pools while continuing to improve the company’s margin, United Spirits said in FY23 annual report.

The company has a comprehensive brand portfolio with over about 63 brands of Scotch whisky, IMFL whisky, brandy, rum, vodka, and gin. 8 of these brands sell more than a million cases annually. The Company has brands spanning across price points operating in all segments of Popular, Prestige, Premium and Luxury.

On outlook, the company said it looks on track to deliver on its medium-term goal of delivering double digit topline growth and achieve mid-high teens EBITDA margins led by better pricing and cost optimization. Regulatory overhangs will continue to pose challenges for the Alcobev industry, the company said.