MOSL: UNITED BREWERIES (Buy)-Broad-based growth across markets-guides for upbeat industry outlook
United Breweries: Broad-based growth across markets; guides for upbeat industry outlook
(UBBL IN, Mkt Cap USD4.9b, CMP INR1300, TP INR1550, 19% Upside, Buy)
- Net sales grew 11.2% YoY off a weak base to INR18.7b (est. of INR19.2b) in 1QFY19. EBITDA grew 25.8% YoY to INR4.0b (est. of INR3.7b). Adj. PAT increased 37.1% YoY to INR2.2b (est. of INR1.9b). Due to the impact of Ind-AS 115 on ‘Revenues from contracts with Customers,’ net sales, EBITDA and PAT for 1QFY19 were understated by INR397m, INR69m and INR45m, without which reported net sales, EBITDA and PAT would have been higher by 2.1%, 1.7% and 2.0%, respectively.
- Volumes grew by a healthy 12% YoY, with continued market share gains (industry grew at 9%). UBL realized volume growth in most regions, except West Bengal and Mumbai. The company faced supply constraints in several states, including Uttar Pradesh and various other markets in south, on account of a shortfall in peak season capacity.
- Gross margin expanded 160bp YoY to 54.1%. Employee costs were up 50bp YoY to 5.7%, while other expenses declined 140bp to 26.9%. EBITDA margin, thus, expanded 250bp YoY to an all-time high of 21.5% (est. of 19.3%).
United Breweries is an alcoholic brewing company based in India. Co. is engaged in the manufacturing and marketing of beer made from malt and allied products. Co.'s brewery products include Kingfisher, UB Premium Ice Beer, Charger Extra Strong Beer, Kalyani Black Lable, Kalyani Export Special, Kalyani Black Label Strong, Bullet Super Strong Beer and UB Export. Co. is also engaged in manufacturing of liquors, beer, leather shoes, organic and inorganic petrochemicals, ciprofloxacin, amitriptylene, and ibuprofen. Co.'s other activities include publishing and printing newspaper and journals; selling and servicing of Hitech Medical equipment; operation of a cable television network and others.
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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