scorecardresearchUnited Spirits shares dip over 5% after weak Q3 results; analysts maintain ‘Buy’ call

United Spirits shares dip over 5% after weak Q3 results; analysts maintain ‘Buy’ call

Updated: 25 Jan 2023, 12:36 PM IST
TL;DR.
United Spirits Limited shares dropped 5.4% after reporting a 64.4% decline in profit in Q3 FY23 due to rising input costs, declining sales and a one-time expense. Analysts have an overall 'Buy' call on the stock.
 The stock has declined over 10 percent in the last six months.

The stock has declined over 10 percent in the last six months.

Shares of Bangalore-based United Spirits dropped 5.4 percent on Wednesday, January 25, after the company recorded a profit decline of 64.4 percent to 110.5 crore in Q3 FY23 as against 310.8 crore posted in Q3 FY22, citing rising input prices, declining sales, and a one-time expense.

The industry has struggled with the high price of additional neutral alcohol and soda ash. In the meantime, bottle costs have increased as a result of rising natural gas costs needed to produce glass.

During Wednesday’s trade, United Spirits opened at a price of Rs. 797.40 per share against the previous close of Rs. 817 per share and dipped further during the early trading session to touch an intraday low of Rs. 772.50. It was trading at 781.40 apiece, down by 4.36 percent, at 11:50 a.m. on the BSE.

The stock touched a 52-week high of Rs. 951.80 on December 09, 2022 and a 52-week low of Rs. 712 on June 17, 2022, indicating that at the current level, the stock is trading just 9 percent above its 52-week low and 18 percent below its 52-week high.

The stock has declined over 10 percent in the last six months. Moreover, in the last one year, it has decreased by nearly 11 percent. However, the stock has grown by almost 22.5 percent in the last five years.

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Stock price chart of United Spirits

On Tuesday, the company informed through an official filing that its total income declined to 6,631 crore for the period under review as against 8,917 crore in the year-ago period.

EBITDA declined to 368 crore in Q3 FY23, sliding 12.38 percent year on year and EBITDA margin stood at 13.2 percent, down 332 basis points (bps), primarily driven by inflation-led gross margin contraction partly offset by targeted A&P calibration.

For the nine months ended December 31, 2022, the Bengaluru-based company reported a net profit of 1,023 crore as compared with 632 crore in the year-ago period, the company stated.

"We delivered a good quarter in an extremely volatile environment carefully navigating through Route to market changes & input commodity cost inflation. This is the first quarter post the slump sale and franchising of the strategically reviewed popular portfolio. During the quarter, we have completed the merger of Pioneer Distilleries to progress towards a simplified legal entity footprint," said Hina Nagarajan, MD & CEO of the company.

"The board of directors have approved a multi-year supply chain agility programme. The programme is expected to strengthen our end-to-end supply chain thereby making it fit for the future. This is in addition to our everyday efficiency savings as we continue to build a more agile and sustainable business," she added.

United Spirits is engaged in the business of manufacturing and sale of beverage alcohol and other allied spirits, including through tie-up manufacturing units and through strategic franchising of some of its brands in certain states.

The company through its subsidiary, Royal Challengers Sports Private Limited, holds the right to the Royal Challengers Bangalore (RCB) cricket franchise of the Indian Premier League (IPL).

According to a MintGenie poll, an average of 23 analysts have a ‘BUY’ call on the stock.

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First Published: 25 Jan 2023, 12:36 PM IST