United Breweries - Q4FY20 Result Update - ICICI Securities

Net revenues for Q4FY20 de-grew 13% YoY to Rs. 1424 crore, led by a steep decline in Q4 volumes (down 21%) due to Covid impact (adjusting for the impact, 6% volume de-growth in Q4 for UBL). Gross margins increased 40 bps to 50.9%, owing to price hikes in certain states that offset higher input prices of glass and barley. However, due to lower operating leverage, EBITDA margin fell 123 bps YoY to 9.3%. EBITDA de-grew 23% YoY to Rs. 132 crore. Subsequently, PAT fell 39% YoY to Rs. 41 crore as weak operating performance was further impacted by lower other income.

Valuation & Outlook

For FY20, in spite of de-growth, 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. Margins are expected to remain rangebound in FY21 as raw material price inflation will be negated, to an extent, by price hikes taken in a few states. On the balance sheet front, the management has actively lowered net debt to Rs. 217 crore while even funding the entire capex of Rs. 402 crore in FY20 out of internal accruals. Although concerns remain like uncertainty regarding the pandemic, the management has displayed discipline and prudence when dealing with evolving customer needs. The sector continues to have long term growth potential. We maintain BUY on the stock with a target price of Rs. 1200.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_UnitedBreweries_Q4FY20.pdf

Shares of UNITED BREWERIES LTD. was last trading in BSE at Rs.1049.4 as compared to the previous close of Rs. 1051.9. The total number of shares traded during the day was 30167 in over 2261 trades.

The stock hit an intraday high of Rs. 1059.85 and intraday low of 1022.55. The net turnover during the day was Rs. 31460741.

Source : Equity Bulls

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