Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

Maintain ADD on United Spirits - In-line volume; mix impacts margin - HDFC Securities

Posted On: 2021-07-28 07:11:55 (Time Zone: UTC)


Mr. Varun Lohchab, Institutional Research Analyst, HDFC Securities and Mr. Naveen Trivedi, Institutional Research Analyst, HDFC Securities

UNSP posted net revenue growth of 57% YoY (HSIE 73%) and a decline of 27% on Q1FY20. Volume performance was healthy as it increased by 61% YoY to 15.8mn (HSIE 15.4mn). There was a miss in P&A realisation, which corrected by 12% QoQ to INR 1,346/case, owing to adverse brand/state mix. The benign raw material inflation resulted in 296bps YoY expansion in gross margin to 44.6% (HSIE 43.9%). Despite a beat on gross margin, negative op lev and high employee cost led to miss in EBITDA margin, which came in at 10% (HSIE 14%). Employee cost was up 56% YoY (51% QoQ) to INR 1.87bn (the highest in 12 quarters). A&P spend was up 62% YoY (-70% in Q1FY21), lower than our estimates, as the company made controlled investments due to the lockdown. While Q1FY22 was a miss, with operations fully recovered, we expect the premiumisation momentum to pick up again, improving the product mix. India is a spirit market with long term premiumisation drivers. The new CEO can accelerate this trend for UNSP with her global experience. We maintain our EPS estimates for FY22/FY23/FY24. We value UNSP at 42x P/E on Jun-23E EPS (standalone) to derive a target price of INR 660 (including INR 24/share of non- core assets). Maintain ADD.

In-line volume, weak realisation due to mix: Net revenue was up by 57% YoY (-54% in Q1FY21 and +12% in Q4FY21, +73% HSIE). P&A revenue was up by 58% (-52% in Q1FY21, +26% in Q4FY21, HSIE 85%), impacted by lockdowns in key regions. Popular revenue grew 60% YoY (-51% in Q1FY21, -3% in Q4FY21, HSIE 56%). P&A volumes were up by 60% YoY (-51% in Q1FY21 and +19% in Q4FY21, HSIE 65%) while Popular volumes grew 63% YoY (-47% in Q1FY21 and -2% in Q4FY21, HSIE 50%). P&A realisation was down 1% (-1.6 in Q1FY21, +5.3% in Q4FY21) to INR 1,346/case. Popular realisation declined by 1.4% (-8.4 in Q1FY21, +1.6% in Q4FY21). With markets opening and the company reverting to full operations, we expect realisations improvement.

Healthy gross margin, negative op lev impacts EBITDA margin: Gross margin was up by 296bps YoY and 66bps QoQ to 44%. A&P spend was INR 838mn - at 5.2% of revenue - lower than our estimates as the company took calibrated steps to reduce costs during the lockdown. Employee costs were up 56% YoY (51% QoQ) to INR 1.87bn. EBITDA margin come in at 10.4% (HSIE 14.2%).

Con call takeaways: (1) The impact of demand in north India (a large Scotch consuming region) had an unfavorable impact on the price mix. (2) The company has passed on the cost of glass, while pricing decisions on neutral spirits will be taken by the government in Sep. (3) The alco-bev industry has coverage of 50,000 retail points, of which 35,000 make about 80-90% of the business. (4) The company targets 1.5-2% value chain extraction every year; (5) India is a sprit market (with premiumisation trend) while Africa is a beer market. (6) It has taken a price hike of ~0.5-0.6%.

Shares of UNITED SPIRITS LTD. was last trading in BSE at Rs. 644.45 as compared to the previous close of Rs. 657.65. The total number of shares traded during the day was 61328 in over 2457 trades.

The stock hit an intraday high of Rs. 662.55 and intraday low of 642.6. The net turnover during the day was Rs. 40082000.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.


Other Headlines:

Automobile Sector - Monthly Quick View - Aug'21 - Mixed Performance across Segments - Reliance Securities

Axis Securities initiating coverage on ICICI Securities

Company Update - Minda Corporation - Q1FY22 - ICICI Direct

Quant Pick - PVR Ltd - ICICI Direct

Quant Pick - ONGC - ICICI Direct

Peak in the headline wholesale inflation is behind us - WPI August 2021 - Acuité Ratings

Sansera Engineering - IPO - Strong Outlook with Steady Cash Flow - Reliance Securities

APL Apollo Tubes - Journey from a semi-commodity player to a branded one - HDFC Securities

Nazara Technologies Ltd - Upbeat in medium-term, Uncertain over Long-term - YES Securities

IPO Review - Sansera Engineering Ltd - ICICI Direct

Overall index is still 0.3% lower than the pre-pandemic levels - IIP July 2021

YES SECURITIES on Monthly General Insurance & Mutual Funds Data

India urban logistics spaces expected to cross 7 million sq. ft by 2022: JLL

Neogen Chemicals - Breaking into the next orbit with a bang - HDFC Securities

Gladiator Stocks - Bharti Airtel Ltd - ICICI Direct

Gladiator Stocks - V-Guard - ICICI Direct

Balkrishna Industries - Industry export growth accelerates - ICICI Securities

HDFC Life Insurance - Exide Life Acquisition - Maintain ADD - YES Securities

Gladiator Stocks - Grindwell Norton - ICICI Direct

Gladiator Stocks - Godrej Properties - ICICI Direct

Monthly Auto Volumes - August 2021 - ICICI Direct

Stock Tales - Easy Trip Planners - ICICI Direct

IPO Review - Vijaya Diagnostic Centre Ltd - ICICI Direct

AU Small Finance Bank - Attrition at top level remains key challenge; business momentum sustained in Jul/Aug'21 - ICICI Securities

Gladiator Stocks - State Bank of India - ICICI Direct

Gladiator Stocks - PNC Infratech - ICICI Direct

Vijaya Diagnostic Centre Ltd - IPO Note - YES Securities

Consumer Durables Sector - Lockdown mars performance yet again - Institutional Research Desk at HDFC Securities

75% of the employees today want to be in office at least once a week as compared to 52% in October 2020: JLL

Gladiator Stocks - Safari Industries - ICICI Direct

Gladiator Stocks - Interglobe Aviation - ICICI Direct

IPO Review - Ami Organics Ltd - ICICI Direct

Q1FY22 GDP - 31st Aug 2021 - Acuité Ratings & Research

Avanti Feeds - Higher input prices hurt margins - ICICI Securities

Company Update - Restructuring - Aarti Industries - ICICI Direct

Q1FY22 Company Update - MM Forgings - ICICI Direct

Company Update - Arvind Fashions - ICICI Direct

Zomato - Can margins and multiples surprise? - ICICI Securities

Ujjivan Small Finance Bank - Top management change and lumpy provisioning concern to weigh on valuation in near term - ICICI Securities

Bharat Dynamics - Guided missile systems to drive orderbook and profit growth - ICICI Securities

Economy - Continued accommodation necessary despite inflationary risks: MPC minutes - ICICI Securities

InterGlobe Aviation - Annual report analysis: Liquidity management remains the mainstay in anticipation of traffic recovery - ICICI Securities

General insurance - Health remains dominant growth driver; Strong all-round performance by Bajaj Allianz - ICICI Securities

Earnings Wrap Q1FY22: Resilient earnings, limited impact of second Covid wave - ICICI Direct

Fine Organic Industries Results Review - In-line performance - HDFC Securities

Power Plus Sector Update - July witnessed strong ~10% generation growth - HDFC Securities

Information Technology Sector Update - 'Hit Refresh' - HDFC Securities

Maintain ADD on JK Cement - Healthy performance - HDFC Securities

Maintain BUY on Star Cement - Margin recovers on pricing gain - HDFC Securities

Maintain BUY on Sadbhav Engineering - Long road to recovery - HDFC Securities


Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020