United Breweries - Q4FY20 First Cut - ICICI Securities

(CMP: Rs. 1042; MCap: Rs. 27551 crore)

United Breweries' reported lower than expected performance both on revenue and profitability front. Net revenues for the quarter de-grew by 13% YoY and EBITDA was lower owing to significant decline in EBITDA margin.

Q4FY20 Earnings Summary

- Net revenues for Q4FY20 de-grew by 13% YoY to Rs. 1424 crore (I-direct estimate: Rs. 1496 crore). For FY20, premium brands like Amstel grew more than fourfold to become a millionaire brand. Other premium brands like Kingfisher Storm and Kingfisher Ultra Max registered double digit growth

- Gross margins increased 40 bps to 50.9% owing to price hikes in certain states, which offset higher input prices of glass and barley. However, due to lower operating leverage, EBITDA margin declined by 123 bps YoY to 9.3% (I-direct estimate: 11.5%). The resultant EBITDA de-grew by 23% YoY to Rs. 132 crore (I-direct estimate: Rs. 172 crore)

- Subsequently PAT declined by 39% YoY to Rs. 41 crore (I-direct estimate of Rs. 71 crore), as weak operating performance was further impacted by lower other income

The theme around favourable demographics, rising disposable income and low per capita beer consumption continues to weigh positively for the segment. In addition, formalisation of the sector (corporation model), supports our positive stance on the company.

We will be coming out with a detailed report post conference call.

Shares of UNITED BREWERIES LTD. was last trading in BSE at Rs.1043.1 as compared to the previous close of Rs. 1042.7. The total number of shares traded during the day was 49717 in over 3171 trades.

The stock hit an intraday high of Rs. 1087.15 and intraday low of 1042.35. The net turnover during the day was Rs. 53118167.

Source : Equity Bulls

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