Premium liquor segment may prove to be a hangover for United Spirits

Lower volumes in this segment and changing consumption pattern may pull down sales and offset gains from benign input prices and cost drive

The stock of United Spirits (UNSP) is up marginally, even as the firm posted a sharp drop in revenue and profit for the March 2020 quarter (Q4) last week.

Although positive news flow such as the permission for home delivery/online sale of liquor, re-opening of shops, and expectations of margin gains have supported the stock, which is up 30 per cent from its March lows, there are reasons for investors to be cautious.

To begin with, the management commentary on benign raw material prices and cost efficiency are supportive of margins, but there is uncertainty over near-term sales and profitability given the