United Breweries Q4 Results Review - Topline Momentum Strong; Margin Recovery To Take More Time: Nirmal Bang

Nirmal Bang Report

For three consecutive quarters United Breweries Ltd. has done well on volume growth, premiumisation and market share growth. We expect this momentum to continue. This momentum alleviates a key investor concern that had emerged in the summer season last year when United Breweries had witnessed an unprecedented market share loss, a large chunk of which has been recovered (including a 130 bps gain in Q4 FY24).

With a likely strong summer season this year, demand outlook in the crucial Q1 period (which contributes ~35-40% to fullyear Ebitda) seems very good.

Margin recovery is taking more time than expected due to higher new bottle mix, weaker state mix and a spate of new launches.

With initiatives underlined by the new CEO, Mr. Vivek Gupta, to grow the business and relatively benign excise environment compared to the past, we believe that the momentum in topline could potentially be much stronger than historical levels even if some investments being made result in a delayed recovery in Ebitda margin.

With the momentum in sales and volume picking up and commodity costs benign, we expect healthy earnings growth over the next two years (~60% Ebitda compound annual growth rate over FY24-FY26E). Maintain Buy.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.