India's United Spirits beats Q1 profit estimates on strong demand for premium brands

United Spirits

23/07/2024 15:20

BENGALURU, July 23 (Reuters) - United Spirits  UNSP.NS  reported a bigger-than-expected increase in
first-quarter profit on Tuesday, helped by strong demand for its premium alcohol brands such as Antiquity and
Signature.
    Profit for Diageo's  DGE.L  India arm rose 25.6% year-on-year to 2.99 billion rupees ($35.7 million) in the
April-June quarter, beating analysts' estimates of 2.63 billion rupees, according to LSEG data.
    Net sales rose 8.3% to 23.52 billion rupees. Sales value of premium spirits, its biggest revenue contributor,
increased 10.1%, the company said.
    
    KEY CONTEXT
    India's alcohol and beverage industry has been seeing steady volume growth in the premium category, propelled by
lifestyle changes and rising incomes.
    Moreover, stable prices of key raw materials such as barley and easing of bottling and packaging expenses have
helped the industry's profitability, which analysts expect will continue.
    Even the national elections, which ran for half the quarter, were not enough to dampen demand, despite
restrictions on liquor sales around voting days. 
    India on Tuesday unveiled the spending of billions of dollars to create new jobs as a part of its budget after
the election.
    
    PEER COMPARISON
                                   Valuation      Estimates (next 12           Analysts' sentiment          
                                   (next 12            months)                                              
                                    months)                                                                 
                      RIC        PE     EV/EBI  Revenue     Profit      Mean     # of      Stock to price   Div
                                        TDA     growth      growth      rating*  analysts  target**         yield
                                                                                                            (%)
 United Spirits        UNSP.NS   58.19   40.10    10.37       10.61     Hold           11       1.07            0.69
 United Breweries      UBBW.NS   70.84   45.23    13.59       53.48     Hold           12       1.03            0.50
 Radico Khaitan        RADC.NS   53.22   31.50    17.52       44.75     Buy             5       0.92            0.17
 Tilaknagar            TILK.NS   26.80   19.31    -34.10      15.08     Strong          1       0.75            0.11
 Industries                                                             Buy                                 
    * Mean of analysts' ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
    ** Ratio of the stock's last close to analysts' mean price target; a ratio above 1 means the stock is trading
above the PT
    
    APRIL-JUNE STOCK PERFORMANCE

    -- All data from LSEG
    -- $1 = 83.6660 Indian rupees

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 (Reporting by Ashna Teresa Britto in Bengaluru; Editing by Mrigank Dhaniwala)
 ((AshnaTeresa.Britto@thomsonreuters.com;))