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Informist, Thursday, Jan. 23, 2025

 

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--United Spirits Oct-Dec net profit INR 4.73 bln
--Analysts saw United Spirits Oct-Dec net profit INR 3.99 bln
--United Spirits Oct-Dec net profit INR 4.73 bln vs INR 3.47 bln year ago
--United Spirits Oct-Dec revenue INR 77.31 bln vs INR 69.49 bln year ago
--United Spirits Apr-Dec net profit INR 11.07 bln vs INR 9.28 bln year ago
--United Spirits Apr-Dec revenue INR 202.31 bln vs INR 189.95 bln year ago
--United Spirits: One-time cost of INR 650 mln in Oct-Dec
--United Spirits Oct-Dec EBITDA INR 5.88 bln vs INR 4.91 bln year ago
--United Spirits Oct-Dec EBITDA margin 17.1% vs 16.4% year ago
--United Spirits Oct-Dec gross margin 44.7%, up 131 bps on year
--United Spirits Oct-Dec sales volume 18.16 mln cases vs 16.48 mln year ago
--United Spirits Apr-Dec sales volume 47.27 mln cases vs 45.85 mln year ago
--United Spirits Oct-Dec premium pdt sales volume 14.9 mln cases, up 11% YoY

 

By Avishek Rakshit

 

KOLKATA – Demand tailwinds arising primarily from the new liquor policy of the Andhra Pradesh government, and a strong uptick in liquor demand during the festival and the wedding season led United Spirits to beat the Street and report a volume-led and price-led growth in revenue and profit in the December quarter.

 

The Indian division of the world's fourth-largest alcoholic beverage company by market capitalisation, Diageo Plc., United Spirits reported a sharp 36.3% on year jump in its net profit for the December quarter to INR 4.7 billion, as against the Street's expectation of nearly INR 4.0 billion. The profit growth was primarily owing to a surge in premium alcoholic beverage consumption which pushed up the revenue considerably ahead of the rise in costs.

 

The company reported a revenue growth of 11.3% on year to INR 77.3 billion. However, net sales value, which is a true reflection of its actual revenue, as it excludes steep excise duty, taxes, and other related overheads, increased by 14.8% on year to INR 34.3 billion, overshooting the Street's estimate of INR 33.8 billion.

 

In the year-ago quarter, United Spirits reported a net profit of INR 3.5 billion on net sales value of INR 29.9 billion.

 

The profit growth could have been higher but for the one-time cost of INR 650 million towards severance costs relating to a closed unit.

 

The new liquor policy of the Andhra Pradesh government, which came up in October, granted 3,736 licences to private shops valid till September 30, 2026, and also paved the way to open 12 new premium stores and retail high-end liquor. Apart from the usual pent-up demand witnessed during the festive season, this government policy boosted sales of premium liquor and contributed significantly towards volume growth. The premium and luxury product portfolio accounts for around 89% of United Spirits' sales.

 

During Oct-Dec, sales volume shot up by 10.2% on year to 18.2 million cases, as against 16.5 million cases in the year-ago quarter. Of this, sales volume of the premium portfolio surged by 11.2% on year to 14.9 million cases. The mass product portfolio, on the other hand, saw a volume uptick of 5.9% on year to 3.2 million cases.

 

As a result, the company's net sales value from premium products rose by 16.1% on year to INR 30.6 billion, and the same for mass products rose by 9.6% on year to INR 3.3 billion. While the premium portfolio has been on a steady rise, the mass segment was a laggard. However, the sales boost in the mass products' segment in Oct-Dec came from a price revision done a few quarters ago along with duty reduction in one of the most salient liquor consuming state, provided the necessary growth tailwinds.

 

According to a study published in August by the National Institute of Public Finance and Policy, an autonomous research institute under the Ministry of Finance, among states and union territories, Andhra Pradesh ranks second in the country after neighbouring Telengana in terms of annual per capita spends on liquor consumption at INR 1,306 during 2022-23 (Apr-Mar).

 

In a statement, the company said it was able to scale up its business in Andhra Pradesh fast just after the new policy came into being. Like other liquor companies, United Spirits was also eagerly awaiting the new policy to kick in and had kept its ground prepared in the state to boost sales.

 

"Looking ahead, we remain cautiously optimistic in the short-term while remaining committed to the long-term potential of the India consumer story," the company's outgoing Managing Director and Chief Executive Officer, Hina Nagarajan, said in the statement.

 

Nagarajan will continue her role till Mar. 31, after which she will assume a new role within the Diageo group. Praveen Someshwar, who has been appointed as chief executive officer designate, will thereafter take her position at United Spirits.

 

As a result of the volume- and price-led performance, United Spirits' earnings before interest, tax, depreciation and amortisation increased to INR 5.9 billion, up 19.8% on year. The EBITDA margin as well increased by 71 basis points on year to 17.1% during the December quarter.

 

Its gross margin was up by 131 basis points on year to 44.7%. The company attributed the growth to sustained revenue growth management interventions and productivity flow through.

 

During Apr-Dec, United Spirits' net profit surged by 19.3% on year to INR 11.1 billion, and net sales value increased by 7.5% on year to INR 86.3 billion. The reported top line, however, increased by 6.5% on year to INR 202.3 billion. Total sales volume during this period was also up by 3.1% to 47.3 million cases.

 

Thursday, shares of United Spirits closed 2.9% higher at INR 1,500.65 on the National Stock Exchange. The company declared its financial results for the December quarter after market hours. End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Deepshikha Bhardwaj

 

 

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