Nuvama has reiterated its buy call on United Breweries Limited (UBL) with a target price of ₹2,400 per share, highlighting recent capacity additions and localisation initiatives that could support margins. The stock is currently trading at ₹1,839.70, down about 22% from its peak amid weak market sentiment and likely softer demand in the second quarter.
The brokerage noted that the company has expanded production of its flagship brand in Andhra Pradesh, adding nearly one-third incremental capacity in the state. Nuvama believes localisation will not only strengthen supply resilience but also help improve margins by lowering logistics costs. Crucially, the move is expected to prevent stock-outs during peak season, particularly in the first quarter.
In addition, UBL is setting up a new canning line in Telangana to address supply constraints in cans, a key packaging format for the brewer. The brokerage said these investments should ease operational bottlenecks and support volume growth going forward.
Despite recent correction in the stock price, Nuvama remains constructive on UBL’s medium-term outlook, citing stronger capacity, localisation benefits and operational efficiencies.
Disclaimer: This article is based on brokerage views as cited. The views expressed are those of the brokerage and do not represent investment advice.