United Spirits soars 7%; market cap touches Rs 1 trn on strong Q1 results

At 11:23 AM, with Rs 1.02 trillion market capitalisation, USL was trading 6 per cent higher at Rs 1,406.20 on the BSE, as against 0.29% decline in the BSE Sensex.

United Spirits in focus: Shares of United Spirits (USL), one of the leading beverage alcohol companies in India and a subsidiary of global leader Diageo plc, hit a record high of Rs 1,416.85, as they soared 7 per cent on the BSE in Wednesday’s intra-day trade in an otherwise weak market, after reporting a strong operational performance in June 2024 quarter (Q1FY25).

A sharp rally in stock price of breweries & distilleries company have seen USL’s market capitalisation hit Rs 1 trillion for the first time today. At 11:23 AM, with Rs 1.02 trillion market capitalisation, USL was trading 6 per cent higher at Rs 1,406.20 on the BSE. In comparison, the BSE Sensex was down 0.29 per cent at 80,197.

 

In Q1FY25, USL’s standalone profit after tax jumped 25.6 per cent year-on-year (YoY) at Rs 299 crore, against Rs 238 crore in a year ago quarter (Q1FY24).

Earnings before interest, taxes, depreciation, and amortisation (Ebitda) increased 18.9 per cent Y-o-Y at Rs 458 crore. Ebitda margin improved 174 bps at 19.5 per cent over the previous year quarter. Excluding the one-offs from the prior year comparatives, Ebitda margin expanded 234 bps Y-o-Y. This was largely driven by gross margin expansion, partly off-set by the higher A&P spends and fixed cost operating leverage.

Net sales grew 8.3 per cent Y-o-Y at Rs 2,352 crore, driven by improved footprint & saliency of innovation and renovation offerings and revenue growth management interventions. Within the above, Prestige & Above segment grew 10.1 per cent, USL said. Net sales for the Popular segment fell 2.4 per cent Y-o-Y as inflation continues to impact the price sensitive consumer of this segment, the company said.

USL 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. The company has brands spanning across price points operating in all segments of Popular, Prestige, Premium and Luxury.

McDowell’s No.1, Royal Challenge, Royal Challenge American Pride, Signature, Antiquity, Black Dog, Director’s Special Black, McDowell’s Rum & McDowell’s Brandy are some of the marquee brands owned by the company. In addition, the company also imports, manufactures, distributes, and sells various iconic Diageo brands such as Captain Morgan, Johnnie Walker, J&B, Baileys, Lagavulin, Talisker, VAT 69, Black & White, Smirnoff and Ciroc in India under different licensing agreements.

While near-term challenges of inflationary headwinds and moderated demand persist, the medium-term industry fundamentals are intact, reinforced by the growing trend of premiumisation, coupled with consumer inclination towards higher quality, experiential drinking occasions, USL said in FY24 annual report.

Despite a slowdown in growth compared to the previous two years, which aligns with the larger consumer space, the premiumisation trend persists. There is a continued optimistic outlook for mid-to-long term growth, supported by the fact that penetration is only half of that seen in the developed markets, and per capita consumption stands at half to a third of those levels.

There is also growth opportunity in new premium categories, which are led by Diageo, through Tequila and craft spirits. Additionally, there is a growing presence of on-trade consumption, gifting, weddings, festivals and special occasions, along with the burgeoning cocktail culture, USL said.