United Breweries (UBL) has reported strong set of numbers for Q2FY19, significantly ahead of estimates on profitability fronts. Net revenue for the period grew 19.3% yoy to Rs1,526.0cr, ~5% above estimates. Gross margin for the quarter expanded 163bps yoy to 55.6%. Gross margin expansion and lower employee cost and other expenses as percent of net sales led to EBITDA growth of 43.4% yoy to Rs318.2cr, ~26% ahead of estimates. EBITDA margin, thus, expanded by 351bps yoy to 20.9%. Led by EBITDA growth and lower interest outgo, PAT jumped by 74.5% yoy to Rs163.8cr, ~42% ahead of estimates.
The company reported a volume growth of 17% yoy during the quarter (and 14% for H1FY19). The volume growth was across states, except for Mumbai (in Maharashtra) and West Bengal primarily due to higher consumer prices.
Volume growth in North was driven by Rajasthan and Haryana, however, Delhi was flat on yoy basis. South volumes grew in double digits across states (except Andhra Pradesh). In West, Maharashtra (except Mumbai) and Goa witnessed single-digit volume growth, whereas volumes in Daman and Chhattisgarh grew in double digit.
Gross margin expansion (163bps yoy) was driven by a favorable state mix, pricing, and effective cost management.
Interest cost for the quarter was down significantly by Rs68.5cr on account of reduced borrowings.
Other income during the quarter stood at Rs3.7cr against Rs1.2cr in Q2FY18.
Tax rate for the quarter stood at 35.1%, at a similar level as in Q2FY18.
Company indicated that following the new excise policy in Uttar Pradesh (effective April 1, 2018), more outlets contributing to overall industry growth.
United Breweries Ltd ended at Rs. 1,300.15, up by 2.05 points or 0.16% from its previous closing of Rs. 1,298.10 on the BSE.
The scrip opened at Rs. 1,301.15 and touched a high and low of Rs. 1,312.30 and Rs. 1,287.30 respectively. A total of 8,90,607 (NSE+BSE) shares were traded on the counter. The stock traded below its 50 DMA.
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