United Spirits (Q4 FY13)

India Infoline News Service | Mumbai |

We downgrade the stock to Market Performer but retain 9-12 mth price target of Rs2,150.

CMP Rs2,304, Target price Rs2,150, Downside 6.7%

  • United Spirits Q4 results reaffirm its premiumization focus with 30% yoy growth (+1.7mn cases) in premium & above brands while overall volumes grew 4% yoy to 31.4mn cases; net sales increased 11% yoy
  • EBIDTA margin improved 92bps yoy as ad spends declined 98bps and traded goods purchase too fell ~200bps offsetting rise in adjusted RM and staff costs; spirits costs rose Rs7.9/case thereby adding Rs250mn to input costs 
  • Reported PAT of Rs560mn impacted by exceptional expense of Rs217mn (Rs43mn in turnover tax provision + Rs173mn provision for diminution in investment & advances in a subsidiary) 
  • Benefit of lower interest expense due to debt reduction to be visible in the current fiscal but the run up in stock post Q3 results leaves little room for further upside; we downgrade the stock to Market Performer but retain 9-12 mth price target of Rs2,150.   
Results table (standalone)
(Rs m) Q4 FY13 Q4 FY12 % yoy
Net sales 20,944 18,817 11.3
Material costs (10,511) (9,263) 13.5
Purchase of traded goods (1,914) (2,091) (8.5)
Personnel costs (1,215) (1,009) 20.5
Other expenditure (4,944) (4,506) 9.7
Operating profit 2,361 1,949 21.1
OPM (%) 11.3 10.4 92 bps
Depreciation (195) (175) 11.4
Interest (1,570) (1,663) (5.6)
Other income 378 149 153.7
PBT 973 260 274.1
Tax (288) 24 -
Effective tax rate (%) 34.0 - -
Adjusted PAT 685 284 141.0
Adj. PAT margin (%) 3.3 1.5 176 bps
FX gain/(loss)+Extra items (125) (185)
Reported PAT 560 100 460.6
Source: Company, India Infoline Research

Financial summary
Y/e 31 March  (Rs m) FY12 FY13E FY14E FY15E
Revenues 91,865 107,487 120,535 130,699
yoy growth (%) 24.5 17.0 12.1 8.4
Operating profit 10,603 13,705 17,115 18,854
OPM (%) 11.5 12.8 14.2 14.4
Reported PAT 1,879 (1,012) 6,720 8,101
yoy growth (%) (67.0) - - 20.6





EPS (Rs) 14.9 (8.0) 46.2 55.7
P/E (x) 154.3 - 49.8 41.3
P/BV (x) 6.2 6.1 3.8 3.5
EV/EBITDA (x) 34.7 27.0 22.7 20.5
Debt/Equity (x) 1.8 1.7 0.6 0.5
ROE (%) 1.6 2.9 9.9 8.9
ROCE (%) 8.3 9.9 11.9 12.4
Source: Company, India Infoline Research
 

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