United Spirits - Multiple Triggers To Drive Earnings Growth: Nirmal Bang

Nirmal Bang Report

There is no change in our EPS forecasts or target multiple (60 times; 5% premium to five-year average and 25% discount to 10-year average PE). We are however rolling forward from June’26E EPS to Sept’26E EPS. In addition, we are attributing Rs 140/share value to the Royal Challengers Bangalore cricket franchise, valuing the business at ~Rs 100 billion.

We remain positive about the structural growth potential of United Spirits Ltd., underpinned by ongoing premiumisation in the Spirits market and the fact that ~87-88% of the company’s sales now come from the Prestige and Above category.

Recent efforts on innovation and renovation, entry into new categories like Tequila and investments in their own local brands and start-ups (a small but burgeoning category over the last couple of years) are also enhancing long term growth prospects.

The AlcoBev sector also provides better near term visibility on strong earnings growth - unlike most other consumption plays, especially given our view that KShaped recovery is likely to continue for the next couple of years rather than a sustained broad-based revival.

Earnings compound annual growth rate is likely to be ~16% over the next three years, slightly higher than the ~14% CAGR seen over the preceding five years.

We derive a target price of Rs 1,725 (Rs 1,505 earlier) and upgrade United Spirits to Buy with a potential upside of 21%. This is now our top pick in the Alcobev space after we recently downgraded United Breweries to “Accumulate” after its strong performance.

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.