United Spirits Q3 - Divestment, A Right Strategy; Now The Core Must Fire On All Cylinders: ICICI Securities

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. .ICICI Securities Report.United Spirits Ltd. continued outperformance in prestige and above portfolio, driven by premiumisation (higher scotch sales), is encouraging. Value growth in P&A stayed significantly ahead of volume growth. Post adjusting for the slump-sale of the popular portfolio in base quarter; we note that the segment’s performance continues to remain subdued (2% revenue growth YoY, 3% volume growth YoY). Also, as per our estimates, business economics of the divested-business (at ~12% Ebitda margin) has been margin dilutive to existing business. However, the impact of operating de-leverage on Ebitda margin is also significant at ~8%. We expect this impact to be re-couped from the current business over a period of time through volume growth and mix improvement. During the quarter, United Spirits completed merger of Pioneer Distilleries. Also, the board has approved a multiyear supply chain agility programme which shall help in strengthening overall supply-chain ecosystem to address future demand and efficient cost saving. Overall headline numbers have been in line with our estimates. Inflation continues to impact operating profit margin (and is not likely to moderate in near term)..Click on the attachment to read the full report:.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

United Spirits Q3 - Divestment, A Right Strategy; Now The Core Must Fire On All Cylinders: ICICI Securities

Value growth in P&A stayed significantly ahead of volume growth.

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