MOSL: UNITED SPIRITS (Neutral)-Volumes decline 8.2% YoY-Portfolio premiumization continues
​United Spirits: Volumes decline 8.2% YoY; Portfolio premiumization continues
(UNSP IN, Mkt Cap USD4.7b, CMP INR2267, TP INR2150, 5% Downside, Neutral)
- UNSP's standalone net sales for 4QFY17 fell 1.1% YoY (est. of +6.4%) to INR20.1b, with volumes down 8.2% (est. of flat volumes). Management stated that adjusted for Bihar prohibition and operating model changes, sales rose 7% YoY. Gross sales grew 9.2% YoY to INR64.7b (Ind-AS), with excise duty as % of sales up 320bp YoY to 68.9% (increased tax/excise levies in MH/West Bengal).
- Overall 4Q volumes down 8.2% YoY to 21.4m cases: Popular volumes fell 15.1% YoY to 12.9m (sales down 16% YoY), while Prestige and above volumes rose 4.9% YoY (sales up 10% YoY) to 8.5m cases. For FY17, volumes fell 3.2% to 90.1m cases. Prestige and above volumes rose 7.6% to 36.8m cases (sales up 13% YoY), while Popular volumes fell 9.5% to 53.3m cases (sales down 9% YoY).
- Gross margin (excl. operating income) improved 330bp YoY to 43.9%. Ad spends fell 70bp YoY to 8.2% of sales. EBITDA margin (excl. other operating income) expanded 730bp YoY to 12.6% (est. of 10.9%), mainly led by gross margin expansion. Staff costs declined by 100bp YoY, and other expenses by 230bp YoY to 17.1% of sales. EBITDA (excl. other op. income) rose 132% YoY to INR2.54b (est. of INR2.48b).
- Other operating income increased 71.9% YoY to INR110m in 4QFY17. Interest costs fell 15.5% YoY to INR853m on debt reduction/favorable rates. PBT was at INR1.52b v/s estimate of INR1.65b. Tax rates were lower than expected. Reported PAT grew 204% YoY off a low base to INR1b (est. of INR937m).
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.