Citi has upgraded United Spirits Ltd (USL) to a ‘Buy’ rating and raised its target price to ₹1,650, citing strong earnings visibility backed by a combination of favorable near-term trends and structural long-term opportunities. The brokerage believes USL is poised to deliver resilient growth supported by its premium portfolio, expansion into new markets, and potential regulatory tailwinds.
Citi outlines five key growth drivers for USL: (1) continued traction in its high-margin Prestige and Bottled in India (BII) segments; (2) ramp-up in Andhra Pradesh over the next three quarters; (3) supportive policy changes in Uttar Pradesh that could reduce working capital requirements and enhance retail reach; (4) a significant premiumisation opportunity within the Indian spirits market; and (5) internal initiatives focusing on productivity and revenue growth management, which will help absorb commodity cost inflation.
The brokerage also highlights the potential for regulatory easing in Delhi, which could act as a further growth lever. Importantly, Citi notes that it will closely track strategic developments under the newly appointed Managing Director and CEO, Mr. Praveen Someshwar, whose leadership could open up new avenues for operational efficiency and product innovation.
USL, a subsidiary of global spirits major Diageo, is one of India’s leading alcoholic beverage companies with a broad portfolio ranging from affordable brands to high-end offerings. The company’s emphasis on premiumisation, supply chain optimisation, and innovation aligns well with evolving consumer preferences, especially in urban centers. With demand gradually recovering and structural tailwinds in place, Citi believes the current valuation offers a good entry point for long-term investors.
