United Spirits rose 1.17% to Rs 830 after the spirits maker's standalone net profit climbed 105.93% to Rs 563 crore in Q2 FY23 as against Rs 273.4 crore posted in Q2 FY22.
Net sales jumped 17.69% to Rs 2,879.7 crore in the quarter ended 30 September 2022 from Rs 2,446.8 crore recorded in the same period a year ago. The rise in the net sales was driven by resilient consumer demand in off-trade, rebounding in on-trade and continued mix improvement.
Net sales during the quarter included Rs 351 crores from brands that are part of slump sale and franchise arrangement transaction closed with Inbrew. Net sales for this portfolio increased 2.9% during the quarter.
Prestige & Above segment net sales grew 23.1% benefitting from momentum of innovation and renovation done in prior quarters. The growth was broad-based and reflects the depth of company's portfolio and the strength of its brands. Popular segment net sales rose 1.7% within which the priority states grew 3.8%.
Profit before exceptional items and tax rose 5.21% to Rs 384 crore in Q2 FY23 from Rs 365 crore in Q2 FY22.
Exceptional items primarily comprise a one-time profit of Rs 381 crore arising from the the slump sale of the business undertaking associated with 32 brands in the 'Popular' segment.
EBITDA improved to Rs 446 crore in Q2 FY23, rising 4.8% year on year. EBITDA margin stood at 15.5% in the quarter ended 30 September 2022. Underlying EBITDA excluding one-offs in prior year was up 11%.
Gross margin was 39.5% in Q2 FY23, primarily reflecting the adverse impact of double-digit inflation in COGS. Meanwhile, marketing reinvestment rate during the quarter stood at 5.5% of net sales.
Commenting on the results, Hina Nagarajan, chief executive officer (CEO) of United Spirits said, We have delivered a quarter of strong top-line growth and resilient bottom-line performance. The performance is underpinned by continued growth momentum and strong mix improvement from recent innovation and brand renovations. We have successfully completed the sale of the business undertaking associated with 32 brands in the 'Popular' segment to Inbrew Beverages Pvt. Ltd. and have given effect to the franchise of 11 other brands for a period of five years. This is aligned to our mission and key to our "Portfolio Reshape Strategy."
The external environment remained challenging during the quarter with ongoing scotch pricing negotiations in select states, route to market change in Delhi and unprecedented levels of input cost inflation. We maintained cost discipline while investing in long-term priorities," she added.
Nagarajan further stated, Looking ahead, in the shorter term, we expect inflation challenges to continue. Scotch price discussions have successfully concluded in a few states. We are focused on maintaining the momentum while driving revenue growth management initiatives and ramping up productivity across the value chain. With the consumer at the heart of our business, the strength of our reshaped portfolio and the investment we are making to accelerate our strategic priorities, we are confident of growing the business in a consistent and sustainable way to create long-term value for all our stakeholders.
United Spirits is the country's leading beverage alcohol company and a subsidiary of global leader Diageo plc. The company manufactures, sells and distributes a portfolio of premium brands.
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