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Informist, Wedesday, Aug. 12, 2025

By Durva A. Shivalkar

MUMBAI - United Spirits Ltd. is expected to report muted earnings for the June quarter due to a high base and a sharp excise duty hike by the Maharashtra government. However, favourable policy changes in Andhra Pradesh and Uttar Pradesh are expected to support sales volume growth. The prestige and above segment is expected to remain the primary growth driver and is also the key focus for the company. However, the overall performance of the company is likely to be affected by flat volumes in the popular segment.

The company is expected to report a net profit of INR 2.90 billion for the June quarter, down 3% on year and down 36% sequentially, according to the average of estimates of eight brokerage firms. The highest estimate for the company's net profit is INR 3.11 billion from Dolat Capital Market Pvt. Ltd. and the lowest estimate is INR 2.57 billion from Nirmal Bang Equities Pvt. Ltd.

The company is expected to post net sales of INR 24.91 billion, up 6% on year but down 16% sequentially, according to the estimates. The highest estimate for net sales is INR 25.25 billion by Anand Rathi Share and Stock Brokers Ltd. and the lowest estimate is INR 24.27 billion by Nirmal Bang Equities Pvt. Ltd.

Maharashtra contributes 15-16% to United Spirits' total revenue and 13-14% to its prestige and above segment. The recent hike in excise duty in Maharashtra led to higher maximum retail prices of liquors. It is relatively easier to raise prices in the premium segment as a price hike would not affect premium segment volumes much, Nuvama Wealth Management said. However, any increase in prices in price-sensitive categories could hurt the volumes in rural and tier-2 and tier-3 markets as consumers may shift to cheaper country liquor, Nuvama said.  

Volume growth in the prestige and above segment is expected to remain subdued in the June quarter, partly due to a high base as the election season had led to inventory stocking in the year-ago quarter. The company's prestige and above segments' volume is expected to grow 5% on year and revenue is expected to grow 7% on year, Motilal Oswal said.

The reopening of the Andhra Pradesh market and favourable government policies in Andhra Pradesh and Uttar Pradesh have helped boost demand over the past few quarters, especially in the prestige and above segment. However, since these changes were made a while ago and things have now settled, their positive effects are starting to create a normal base and thus growth may start fading from the December quarter onwards due to the higher base, according to brokerages tracking the company.

In Andhra Pradesh, the new excise policy implemented from October has allowed a total of 3,736 private retail outlets to sell liquor. It has introduced a licence fee based on the population of the city and has also introduced low-priced liquor – a 250 millilitre bottle at INR 99 – to combat the spread of illegal liquor. The new policy aims to generate revenues of around INR 300 billion per annum.

In Uttar Pradesh, the new excise policy implemented from April has introduced composite shops, merging beer and foreign liquor outlets. The policy scrapped licences for beer shops and allowed beer to be sold at country liquor shops or at composite shops. The policy also cut the licence fee for low-alcohol bars, which serve beer and wine. The policy introduced an e-lottery system for liquor and cannabis shops. The policy aims to garner revenues of INR 600 billion, up INR 100 billion from the previous year, by raising excise duty on liquor.

A new chief executive officer at United Spirits added a further element of uncertainty, especially considering rising competition. At the same time, the regulatory environment is turning adverse, Dolat Capital said.

United Spirits is expected to report an earnings before interest, tax, depreciation, and amortisation of INR 4.32 billion for the June quarter, according to the average of estimates from seven brokerages. The highest EBITDA estimate is INR 4.60 billion from YES Securities (India) Ltd. whereas the lowest estimate is INR 4.00 billion from Nirmal Bang. The EBITDA margin is expected to contract 270 bps on year due to a rise in expenses and as fixed costs stayed high while sales were weak during the quarter, Motilal Oswal said.

At 1112 IST, shares of United Spirits traded 0.5% higher at INR 1,304 on the National Stock Exchange. The shares have fallen 17% since the announcement of the March quarter earnings. The company will announce its June quarter earnings later in the day.

Of the 10 brokerage ratings on the stock available with Informist, six have a 'buy' recommendation with an average target price of INR 1,650 and two have a 'sell' recommendation on the stock.

Following are the June quarter earnings estimates for United Spirits Ltd., in INR million, based on reports from eight brokerages in the descending order of estimate of net profit:

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Edited by Tanima Banerjee

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