MOSL: UNITED SPIRITS (Neutral)-Strong operating performance-Margin guidance maintained
United Spirits: Strong operating performance; Margin guidance maintained
(UNSP IN, Mkt Cap USD6.1b, CMP INR619, TP INR655, 6% Upside, Neutral)
- UNSP posted standalone net sales growth of 14.2% YoY to INR22.3b, with volumes growing 10.3% YoY (est. of +5.4%) on a base of 15.9% decline. Prestige and above (P&A) volume grew 15.4% YoY, while Popular volume increased 5% YoY (underlying Popular volumes up 8% YoY). EBITDA grew 58.6% to INR4.3b (est. INR3.2b). Adjusted PAT grew 89.4% to INR2.6b (est. INR1.8b).
- 1HFY19 performance: Sales/EBITDA/adj. PAT grew 13.6%/49.1%/74.2%. EBITDA margin expanded 370bp YoY to 15.6%. For 2HFY19, we expect Sales/EBITDA/Adj. PAT growth of 13.9%, 41% and 38.3% YoY, respectively.
- Concall highlights: (1) Quarterly performance gives the company confidence on earlier stated double-digit sales growth guidance and mid-teens margins in medium term. Management stated that ‘One swallow doesn’t make a summer and one quarter doesn’t make a year’, (2) A&P spends to be 9-10% of sales for FY19.
United Spirits Limited is a spirits company engaged in the business of manufacture, purchase and sale of alcoholic beverages. The Company operates through two segments: India and Outside India. The India segment is engaged in the business of manufacture, purchase and sale of Beverage Alcohol (Spirits and Wines), including through Tie-up units/brand franchisees within India. The Outside India segment is engaged in the business of manufacture, purchase and sale of Beverage Alcohol (Spirits and Wines), including through Tie-up units/brand franchisees outside India. Its product portfolio includes whisky, vodka and rum segments, and caters to various consumers through luxury, premium, prestige and popular spirits categories. Its brand portfolio includes McDowell's No.1, Royal Challenge, Signature and Antiquity. It has over 80 (74 excluding Royalty and Franchise units) manufacturing facilities spread across approximately 20 states and over three union territories in India.
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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