AlcoBev companies in Dolat Capital's universe (United Spirits/Radico Khaitan/United Breweries) are expected to report revenue /gross profit/Ebitda/adjusted profit after tax growth of 11.3/12.5/12.8/20.4% YoY. Growth will largely be driven by volumes (especially in IMFL), low-single digit price mix and modest gross margin expansion.
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Dolat Capital Report
We remain positive on Radico Khaitan Ltd. driven by premiumization, feeling the product and geographic white-gaps and superior execution. United Spirits Ltd. would be negatively impacted by Maharashtra excise policy and may benefit United Breweries Ltd. to some extent.
Higher earnings expectations, stock outperformance and valuations capture the sector's optimism, leaving limited room to err. In this backdrop, we see limited scope for multiple rerating, if any.
Stock returns thus shall follow the annualized earnings trajectory. Moderation in P&A demand and increased competition in the segment are key risks. Our preference is for Radico Khaitan.
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