United Spirits Q4 Preview: Robust Summer, Cooling Barley Prices, Sustained Momentum To Drive Growth

United Spirits Ltd. is set to announce its financial results for the January–March quarter on Tuesday, with brokerages remaining bullish and naming it among their top picks within the discretionary space.

According to the brokerages, India’s alcoholic beverages sector is poised for strong growth, underpinned by favourable regulatory developments, easing input costs, and buoyant demand, particularly in the premium segment.

BofA highlights a positive operating environment and assigned a price objective of Rs 1,585, citing improved visibility across regulatory and business fronts. Nirmal Bang pointed to a robust summer season, cooling barley prices, and sustained momentum in the Prestige & Above portfolio, forecasting double-digit revenue growth and margin expansion.

Investec echoed this optimism, expecting sector-wide double-digit growth with supportive state policies and benign commodity costs driving Ebitda outperformance.

As per Bloomberg estimates, United Spirit’s consolidated revenue for the March quarter is expected to fall 53.4% year-on-year to Rs 2,977.38 crore, compared to Rs 6,394 crore a year ago.

Ebitda is likely to rise 23.3% year-on-year to Rs 446.38 crore from Rs 362 crore, while margin is expected to expand to 14.99% from 5.66% a year ago. Net profit is seen declining 24% to Rs 308.2 crore for the quarter.

• Revenue seen 53.4% lower at Rs 2,977.38 crore versus Rs 6,394 crore.

• Ebitda seen at 23.3% higher at Rs 446.38 crore versus Rs 362 crore.

• Margin at 14.99% versus 5.66%.

• Profit seen 24% lower at Rs 308.2 crore versus Rs 405.7 crore.

BofA | Rating: Buy | Target Price: Rs 1,585

• Target price at Rs 1,585 per share included Rs 1,485 per share for standalone business, Rs 87 for Bengaluru IPL franchise (based on recent transaction valuations) and Rs 13 per share for Bengaluru WPL franchise (based on company investment).

• Valuation based on 55 times FY27E standalone earnings (previously 60 times Sept-26E).

• Multiple is slightly above the stock's five-year average one-year forward P/E.

• Positive on regulatory and operating environment trends.

• Specific business factors influencing premium valuation.

• Favourable regulatory changes in pricing, taxation, route-to-market can be an upside.

• Decline or moderation in input costs (notably ENA prices) is a positive.

• Stronger-than-expected demand, especially for premium brands.

• Higher competition from players like Pernod or niche/domestic competitors is a downside for the company.

• Lower-than-expected Free Cash Flow improvement or receivables issues is a risk, according to BofA.

• Weak profitability in BIO/premium brands.

• Strong growth expected in the Alco-Bev sector.

• The sector will outperform other discretionary sectors with revenue growth of ~7.3% year-on-year. This is largely led by United Spirits with revenue growth of ~11.5% year-on-year.

• Barley prices have declined approximately 9% since October 2024.

• Positive outlook for summer season first quarter of financial year 2026.

• Overall volume growth at 4.7% year-on-year, Prestige and above portfolio volume growth at 6.2% year-on-year on the back of continued momentum post the festive season.

• Popular portfolio likely to see 1.3% year-on-year volume decline.

• Overall revenue growth is expected at 11.5% year-on-year, while gross margin at 100 bps year-on-year increase (down 40 bps QoQ).

• Ebitda margin to increase 160bps year-on-year (down 200 bps QoQ).

• Ebitda growth at 24.3% year-on-year.

• Combined sector Ebitda is expected to increase by 12.9% year-on-year whereas APAT is likely to decline by 32.9% year-on-year.

• The decrease in APAT is at the higher end because of higher other income for United Spirits in the base quarter.

• Strong double-digit growth expected in fourth quarter and beyond.

• Most state policy changes are complete and are now seen as net positive.

• Notable positive impact from Andhra Pradesh and Uttar Pradesh policies.

• Benign commodity costs (spirits and beer) to support margin expansion.

• Maintained a positive stance on the Alco-Bev sector, with United Spirits among the top picks.

• Ebitda growth will be ahead of revenue growth for the sector.

• Estimates 12.3% revenue growth in P&A, with 8% volume growth for United Spirits.

• Building a 1% revenue growth for the Popular portfolio owing 1% volume decline.

• Gross margins are expected to improve by 220 bps year-on-year, supported by lower glass prices and stability in ENA prices.

• Expects Ebitda margin expansion of 200 bps year-on-year, largely led by gross margins.

• Liquor companies are likely to post a decent showing, aided by premiumisation, Andhra policy and marriage season.

• Strong premiumisation (beer, spirits and personal care) continues overall with urban slowdown.

• Estimates P&A net sales shall grow 12.2% year-on-year and forecast P&A volumes shall grow 8% year-on-year.

• Overall revenue shall grow 10.5% year-on-year.

• Overall Ebitda likely to grow 29% year-on-year. A steep increase in Ebitda is due to a favourable base and operating leverage.

• Expects overall volumes to grow 7% year-on-year.

• Anticipates Popular net sales and volumes to remain flat year-on-year.

• Popular segment reported high growth in third quarter due to one-offs that includes duty reduction in Karnataka, leading to pipeline build-up.

• Gross per Ebitda margin shall expand 108bp/227bp year-on-year to 44.4%/15.9%, according to brokerage.

• Reckon A&P as a percentage of sales shall be 12% for the fourth quarter, down 23 bps year-on-year.

• Anticipates a steep decline in profit due to higher other income relating to dividend from RCSPL in fourth quarter of the previous fiscal year and third quarter of financial year 2025.

• Sales expected to grow 11%, with 5% volume growth.

• P&A volumes are expected to grow 7%, while regular volumes are expected to decline 3%.

• Sales growth for P&A is expected to be 12%, while regular segment is expected to report flattish sales growth.

• Ebitda is expected to grow ~23% year-on-year, and margin expansion is expected to be ~140bps year-on-year, led by gross margin expansion (~70bps) and operating leverage.

• Adjusted profit is expected to decline ~30% due to dividend income from RCB and lower ETR in the base period.

• United Spirits is expected to post ~12% year-on-year revenue growth in fourth quarter, led by volume growth in the P&A segment, while the luxury segment may continue to see moderated demand.

• Regular segment volumes are likely to rise 1–2%.

• Stable RM prices and favourable product-mix to drive 261 bps expansion in gross margin in fourth quarter.

• Ebitda margin to expand 169 bps to 15.3% in fourth quarter.

• Higher ad-spends to be maintained (ahead of IPL) to support new product rollouts.

• Key focus area according to the brokerage include commodity inflation, policy actions and growth in luxury portfolio.