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Motilal Oswal Report
United Breweries Ltd. delivered revenue growth of 12% YoY (estimate: 10%). Volume growth was at 5% YoY (estimate: 7%), partially impacted by unfavorable weather conditions across several states. The Premium portfolio continued to deliver strong performance, posting a 27% YoY growth (44% in Q1 FY25).
The North, West, and South regions reported 12%, 12%, and 1% volume growth, respectively. However, the East region declined 6% YoY. The volume growth was driven by states such as UP, Rajasthan, Maharashtra, Karnataka, and Telangana. Meanwhile, West Bengal, Delhi, and Tamil Nadu exhibited weak performance.
Gross margin contracted 70bp YoY but expanded 100 bp QoQ to 43.8% (estimate 44.3%), led by product mix and cost initiatives. Cost control, local production initiatives, and product mix led to 100bp YoY expansion in Ebitda margin to 10.7%.
The company remains focused on volume-led growth along with share gain in the premium portfolio. It has introduced Amstel Bier in India to further improve its footprint in the premium segment. The initial launch will be in Maharashtra.
We model 12% revenue CAGR during FY24-27E led by high single-digit volume growth. We model Ebitda margin of 12-13% for FY26/FY27 (16-17% in FY18/FY19).
We value the stock on 55 times Sep’26E EPS to derive a target price of Rs 1,950 (maintain). With limited downside in the stock, we upgrade our rating from Sell to Neutral.
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