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Dolat Capital Report
United Breweries Ltd.'s FY20 annual report highlights the long-term beer industry potential and of beer as a preferred choice of consumption among young Indians. But, regulatory uncertainties and steep increase in taxation remains a key hindrance.
Beer industry declined by 11% YoY in FY20 versus 4% for United Breweries in our view. The company's market share stood at approximately 52%.
FY21 will be another weak year on account of Covid-19 and loss of key season. Non -alcoholic beverage remains a key focus area with company targeting to double business every year for next three years.
In respect of Competition Commission of India (CCI) case on alleged price - fixation, United Breweries needs to file their reply to the DG-CCI report and after hearing by CCI, the demand may be raised. It may incur approximately Rs 5 -7 billion penalty. But, we would see it as one -time costs and be buyer on dips.
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