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Motilal Oswal Report
United Breweries Ltd.'s results were worse than our expectations.
Its outlook remains weak, with:
- June volumes down 57% YoY,
- lockdown in various urban centers thus far in Q2 FY21,
- no repeal of excise duty increase in majority of the states (that saw a steep excise increase in May), and
- the continued likelihood of closure of on-trade sales for a few more months.
Moreover, recovery in FY22 is also unclear due to:
- an unprecedented steep excise duty increase threatening both net sales growth and profitability for the next few quarters and
- the risk of weak state finances leading to delay in payments, thereby increasing receivables.
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