MOSL: Morning India (13/February/20): 1. United Spirits (ART); 2. Dr Reddy's Labs; 3. Hindalco Industries; 4. P&G Hygiene; 5. Info Edge; 6. ABB; 7. Ashok Leyland; 8. PI Industries
MOrning India (13/February/20): 1. United Spirits (ART); 2. Dr Reddy's Labs; 3. Hindalco Industries; 4. P&G Hygiene; 5. Info Edge; 6. ABB; 7. Ashok Leyland; 8. PI Industries
Today’s top research idea
United Spirits (ART): Rising premiumization/ unit realization driving operational improvement
- UNSP's FY19 annual report analysis highlights EBITDA improvement (+15.4% to INR13.9b), led by portfolio premiumization and higher unit realization. EBITDA margin expanded to 15% (FY18: 14%), mainly driven by standalone operations. Low working capital requirement (CCC down to 73 days from 80 days in FY18) resulted in (a) earnings to cash flow conversion improving to 128% (FY18: 111%), and (b) OCF rising to INR9.5b (FY18: INR9.3b).
- Over FY15-19, UNSP focused on paring its high debt, leading to a decline in D/E to 0.9x (FY15: 7.6x). It has already provided for the loans/advances given to its loss-making subsidiaries, with allowances forming 92% (FY18: 90%) of the gross loans in FY19. Aggregate exposure of the standalone entity toward these loss-making subsidiaries stood at INR3.7b (12% of standalone NW). Contingent liability has risen to INR14.7b (FY18: INR14.3b), forming 48% of NW. We note that accounting of franchise rights (pertaining to its IPL cricket team RCB) in line with its peers, could (one time) impact the company's profitability/net worth (INR3.6b, 10% of NW).
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Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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