BENGALURU (Reuters) – United Spirits reported a bigger-than-expected increase in first-quarter profit on Tuesday, helped by strong demand for its premium alcohol brands such as Antiquity and Signature.
Profit for Diageo’s India arm rose 25.6% year-on-year to 2.99 billion rupees ($35.7 million) in the April-June quarter, beating analysts’ estimates of 2.63 billion rupees, according to LSEG data.
Net sales rose 8.3% to 23.52 billion rupees. Sales value of premium spirits, its biggest revenue contributor, increased 10.1%, the company said.
KEY CONTEXT
India’s alcohol and beverage industry has been seeing steady volume growth in the premium category, propelled by lifestyle changes and rising incomes.
Moreover, stable prices of key raw materials such as barley and easing of bottling and packaging expenses have helped the industry’s profitability, which analysts expect will continue.
Even the national elections, which ran for half the quarter, were not enough to dampen demand, despite restrictions on liquor sales around voting days.
India on Tuesday unveiled the spending of billions of dollars to create new jobs as a part of its budget after the election.
PEER COMPARISON
Valuation Estimates (next 12 Analysts’ sentiment
(next 12 months)
months)
RIC PE EV/EBI Revenue Profit Mean # of Stock to price Div
TDA growth growth rating* analysts target** yield
(%)
United Spirits 58.19 40.10 10.37 10.61 Hold 11 1.07 0.69
United Breweries 70.84 45.23 13.59 53.48 Hold 12 1.03 0.50
Radico Khaitan 53.22 31.50 17.52 44.75 Buy 5 0.92 0.17
Tilaknagar 26.80 19.31 -34.10 15.08 Strong 1 0.75 0.11
Industries Buy
* Mean of analysts’ ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** Ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
APRIL-JUNE STOCK PERFORMANCE
— All data from LSEG
— $1 = 83.6660 Indian rupees
(Reporting by Ashna Teresa Britto in Bengaluru; Editing by Mrigank Dhaniwala)
