ICICI Securities has issued a “buy” call on United Spirits, with a target price of Rs 1580. The current market price of United Spirits is Rs 1427.25. The company is a large-cap entity with a market capitalization of Rs 103,792.97 crore, operating in the beverages-alcoholic sector.
The company reported quarterly results for the period ended December 31, 2024, with a consolidated total income of Rs 3505.00 crore, a 20.95% increase from the previous quarter and a 14.76% increase from the same quarter last year. The company reported a net profit after tax of Rs 338.00 crore.
The company’s gross margin expanded by 130 basis points (bps) year-on-year (YoY) to 44.7%, driven by stable input inflation and productivity savings. Underlying EBITDA margin expanded by 69 bps YoY to 17.1%. The company’s appraisal investment rate remains healthy at 11%.
ICICI Securities has cut its earnings estimates for FY25E and FY26E by 3% and 5%, respectively, and models revenue, EBITDA, and PAT CAGR of 10%, 15%, and 15% over FY24-27E, respectively. The company maintains an “add” call with a DCF-based revised target price of Rs 1580, down from Rs 1480 earlier. The company’s promoter holding is 56.67%, while FIIs and DIIs own 15.93% and 13.52%, respectively.
However, there are significant downside risks, including potential tax hikes and a ban on spirits in certain states. Therefore, investors must consult their financial advisors and seek independent advice before making any investment decisions.