Nuvama Institutional Equities has reiterated a buy rating on United Spirits Ltd. (USL) with a target price of ₹1,820, indicating a potential upside of about 17% from the current market price of ₹1,560.10, citing strong cost discipline and premium segment momentum.
USL reported a 10.5% YoY increase in Q4 revenue to ₹29.5 billion, broadly in line with both Nuvama and street expectations. However, EBITDA rose 39.5% YoY to ₹5.1 billion, outperforming estimates due to improved margins and tight cost control.
Overall volumes grew by 6.9% YoY, led by Prestige & Above (P&A) segment, where volumes and value rose 9.2% and 13.2% YoY, respectively. In contrast, the Popular segment saw a 2.2% volume decline, with flat sales.
Cost rationalisation helped drive margin expansion, with gross and EBITDA margins up 114bp and 356bp YoY, respectively, to 44.5% and 17.1%. Advertising and promotion (A&P) spends declined 2.8% YoY, now at 11% of sales, providing further operating leverage.
While other income fell 25.8% YoY, overall profitability remained strong, supporting Nuvama’s bullish stance on the stock.
Current market price (CMP): ₹1,560.10
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