MOSL: ANNUAL REPORT THREADBARE (ART) | UNITED SPIRITS FY17- Earnings to cash conversion improves
​ANNUAL REPORT THREADBARE (ART) | UNITED SPIRITS FY17: Earnings to cash conversion improves
United Spirits’ (UNSP) FY17 annual report analysis highlights net revenue growth of 4%, driven by premiumization and price increases, primarily at the standalone level. EBITDA margin expanded 70bp to 11.4% at the standalone level, but declined 20bp to 11.2% at the consolidated level. Losses in subsidiaries led to consolidated PAT (at INR0.9b) being lower than standalone PAT (at INR1.7b). UNSP recorded impairment loss of INR0.7b (FY16: INR3.2b) towards investments in the three loss making subsidiaries (SDL, TDL & PDL) in standalone financials and INR0.4b towards goodwill in consolidated financials. Aggregate exposure of the standalone entity towards these loss-making subsidiaries was INR3.1b (17% of NW). Earnings-to-cash-conversion improved to 86% (FY16: 49%), with lower working capital requirements leading to an increase in OCF to INR6.5b (FY16: INR2.8b). While D/E remains high at 2.1x, further monetization of non-core assets might help deleveraging. Additional inquiry on fund diversion by the erstwhile promoter management highlights no material future provisioning.
Premiumization and price increase drive operating profitability: Standalone net revenue increased 4% to INR85.5b despite volumes declining 3% due to strategic decision of franchising the brands and socio-economic headwinds. Gross margin expanded 160bp to 42.9%, primarily driven by price increase (90bp) and premiumization. EBITDA increased 9% to INR9.7b, with EBITDA margin expanding to 11.4% (FY16: 10.7%).
United Spirits is engaged in the business of manufacture, purchase, sale and distribution of alcoholic beverages, mainly, whiskey, brandy and rum. Co. is the flagship company of the UB Group Spirits Business. Co. conducts its activities in the Indian Made Foreign Liquor (IMFL) industry segment through Tie-up manufacturing/brand franchise. Co. maintains a portfolio of 60 brands, sourced through its manufacturing network which comprises 12 owned distilleries and 27 contracted sources of supply. Co.'s brand names include, Black Dog, Single Malt, No. 1 McDowell's brandy, Caesar, Red Riband, White Mischief, Celebration XXX, Old Cask, etc.
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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