Elara Capital has upgraded United Breweries Limited to 'Accumulate' from 'Reduce' and raised its target price to Rs 1,900 from Rs 1,700, implying an upside of around 17% from current levels. The upgrade is driven by anticipated excise policy changes in Karnataka, which could significantly improve volume growth and profitability for the beer maker.
The brokerage values United Breweries, which is part of the Heineken Group, at 53x FY28 earnings, reflecting confidence in sustained growth and margin expansion.
The proposed shift in Karnataka's excise framework to an alcohol-in-beverage (AIB) structure could reverse the impact of steep duty hikes over the past two years. The hikes had led to a 20-25% decline in beer volumes and a shortfall in state excise collections. It also notes that if similar AIB-based excise reforms are adopted by other states, it could trigger further price corrections and demand recovery across markets, adding to the re-rating potential.
Under the new regime, Elara expects price corrections of 25-30% in the economy segment, which is the largest contributor to volumes. Given that Karnataka accounts for roughly 13% of India's beer consumption, the policy shift is seen as a meaningful demand trigger.
Economy Segment To Drive Growth
The brokerage highlights that UBL, with 45% market share in Karnataka's economy segment, is well placed to benefit. Lower prices are expected to drive a 30-45% recovery in economy segment volumes, lifting overall beer category growth to about 25%. Additionally, the price gap between mild and strong beer is likely to widen under the new tax structure, improving the competitiveness of mild beer - another positive for UBL.
Factoring in these changes, Elara expects 6% upside to earnings, driven by both volume recovery and improved realizations. In its base case, the brokerage estimates 25% volume growth, translating into incremental revenue gains and margin expansion. Elara has raised its revenue and EPS estimates by over 3% for FY27 and FY28, and now expects a 6.5% volume CAGR over FY27-FY28, with earnings growth tracking slightly higher.
Apple Away From The Tree?
This upgrade come one month after Heineken announced that it will eliminate between 5,000 and 6,000 roles over the next two years as it grapples with weakening beer demand and mounting cost pressures. The company said it is "accelerating productivity at scale" to unlock savings, with workforce reductions forming a central part of that effort. Heineken employs roughly 87,000 people globally.
Heineken reported that total beer volumes fell 2.4% in 2025, with declines of 4.1% in Europe and 3.5% in the Americas. In the fourth quarter alone, global volumes dropped 2.8%.
Annual sales came in at 34.4 billion euros, down from 36.0 billion euros the previous year. Net profit reached 2.7 billion euros, a 4.9% increase on a constant-currency basis, reflecting cost controls and pricing measures.
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