Near-term profitability gains likely to be difficult for United Spirits

According to analysts, Ebidta will increase by only 30 bps in FY20 to 14.3 per cent

United Spirits expects its revenue to grow in double digits over the medium term, despite regulatory challenges, said the company.

The Street, however, is still worried over the effects of cost, competition, and taxes on the company’s profitability. Analysts at Emkay Research said expanding margins would be tough in 2019-20 (FY20) because of the steep increase in input prices and intense competition.

Prices of key inputs such as extra-neutral alcohol (ENA) and glass bottles have gone north, casting a shadow on operating profit margins of the company. ENA accounts for about 40 per cent of raw material costs.

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