United Spirits Ltd's Q3FY19 standalone net profit rises 42.8% yoy to Rs192.4cr : Misses Estimates

The company’s standalone revenue stood at Rs2,500.9cr, up 10.5% yoy and 12.2% qoq.

Jan 23, 2019 09:01 IST India Infoline Research Team

United Spirits Ltd Q3FY19

Standalone Results Q3FY19: (Rs. in cr)

Q3FY19 YoY (%)
Revenue 2,500.9 10.5
EBITDA 347.8 27.7
EBITDA Margin (%) 13.9 188
Net Profit (adjusted) 192.4 42.8
***EBITDA margin change is bps
United Spirits (UNSP) reported a disappointing set of numbers for the quarter, lower than consensus estimates on EBITDA and PAT fronts. Revenue (net of excise duty) grew by 10.5% yoy to Rs2,500.9cr (broadly in-line with estimates). Aided by lower costs (employee, advertisement and other expenses) as percent of net sales, EBITDA grew by 27.7% yoy to Rs347.8cr with an EBITDA margin of 13.9%, 188bps yoy expansion. However, EBITDA missed the estimates by 9%; EBITDA margin was expected at 15%. Other income for the quarter jumped significantly by 160.2% yoy to 61.4cr. Thus, PAT for the quarter stood at Rs192.4cr, 42.8% yoy growth (~13% lower than estimate).
  • Revenue growth was primarily aided by continued strong performance of the Prestige and Above (P&A) segment and benefit from lapping the impact of highway ban last year. After adjusting for the operating model changes, net sales increased 13%.
  • P&A segment’s revenue grew 15.5% yoy on a weak base (~68% revenue contribution) led by 12.1% yoy growth in volumes coupled with 3% yoy growth in realisation.  In the Prestige segment, key brands like Signature and Royal Challenge grew faster than the category
  • However, the Popular segment reported 2.8% yoy decline in revenue; volume declined by 3.6% yoy and realisation was up 0.8% yoy. Adjusting for the operating model change, Popular segment’s revenue growth stood at 2% yoy.
  • Improved mix offset the raw material inflation and hence gross margin for the quarter was flat on yoy basis at 47.3%.
  • Marketing expense during the quarter broadly remained flat yoy at Rs267.1cr, 10.7% of net sales, down 80bps yoy. However, on qoq basis, it was up 33.2%.
  • Interest cost for the quarter stood at Rs55.2cr, down 16.1% yoy, driven by lower debt, improved debt-mix and lower interest rates.
  • Other income for the quarter jumped significantly by 62.2% yoy to Rs61.4% led by monetization of some of the non-core assets.
  • Company re-iterated its ambition of achieving double-digit revenue growth and improvement in margins to mid-high teens in the medium term.

Technical View:

United Spirits Ltd is currently trading at Rs. 581.25, down by 17.95 points or 3% from its previous closing of Rs. 599.20 on the BSE.
The scrip opened at Rs. 600.55 and has touched a high and low of Rs. 608 and Rs. 576 respectively. So far 23,62,789 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 50 DMA.

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