United Spirits shares plunge 7%; brokerages express mixed views post Q2 result
United Spirits share price plunged almost 7 per cent in morning trade on BSE on Friday, November 10, as investors offloaded shares of the company in the wake of its September quarter earnings which showed a significant year-on-year (YoY) fall in standalone revenue and profit.
In an exchange filing on Wednesday, November 8, United Spirits said its standalone revenue from operations dropped almost 19 per cent YoY to ₹6,733.8 crore. In the same quarter last year, the company’s revenue from operations was at ₹8,275.9 crore.
The company’s standalone profit for the period fell 37 per cent YoY to come at ₹341.3 crore against ₹542.3 crore in the same quarter last year.
Following the company’s Q2 earnings, the stock ended 0.29 per cent lower at ₹1,096.50 on November 9. On Friday, November 10, United Spirits share price opened at ₹1,094.70 against the previous close of ₹1,096.50 and fell 6.62 per cent to the intraday low of ₹1,023.95.
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Brokerages express mixed views
Kotak Institutional Equities has an add call on the stock with a target price of ₹1,075.
“We trim FY2024-26 revenue/EPS estimates by 1-2 per cent. Our estimates factor in some benefits of the impending UK FTA. We roll over and revise fair value to ₹1,075 ( ₹110 for the IPL team and ₹965 at 46 times (unchanged) Dec-25E PE for the alcohol beverages segment),” said Kotak.
Brokerage firm Motilal Oswal Financial Services has a neutral view on the stock with a target price of ₹1,050.
Motilal has increased its FY24 and FY25 EPS estimates by 8.7 per cent and 10 per cent, anticipating EBITDA margin gains.
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“With United Spirits already achieving a 17 per cent margin in the first half of FY24, aligning with the management’s guidance of surpassing 15 per cent, we now expect a 15.6 per cent margin in FY24 versus our earlier estimate of 14.7 per cent,” said Motilal.
“In the near term, there are challenges in the form of cost inflation, which aligns with our earlier projections in the commodity note. Additionally, there will be persistent pressure in the Popular and low-prestige categories due to high inflation. While other discretionary companies have achieved double-digit sales/EBITDA growth over the past five years in a relatively stable demand environment, United Spirits has recorded single-digit growth in the same period. As a result, we maintain a neutral rating on the stock with a target price of ₹1,050 (based on 55 times FY25E EPS),” said Motilal Oswal.
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Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Updated: 10 Nov 2023, 11:15 AM IST
