United Spirits - Q1FY21 First Cut - ICICI Securities

(CMP - Rs. 590; MCap - Rs. 42930 crore)

United Spirits reported a mixed set of numbers. Though revenues were significantly better than our estimates, however EBITDA and PAT came below our estimates. PAT was negatively impacted by Rs. 75 crore on account of exceptional expense for 'Raising the Bar' campaign which aims to provide non-cash support to qualifying pubs, bars and restaurants serving alcohol in Mumbai, Delhi, Bengaluru and other select cities through the Diageo Bar Academy.

Q1FY21 Earnings Summary

- Standalone net revenue de-grew 54% YoY to Rs. 1030 crore (I-direct estimate: Rs. 699 crore), mainly due to hefty volume de-growth in the P&A segment due to national lockdown in April and May and continued closure of on-premise outlets throughout the quarter and drying up of social occasions for liquor consumption. Prestige & above segment reported volume de-growth of 52% YoY to 5.0 million cases while Popular segment reported volume de-growth of 47% to 4.8 million cases. Revenues for prestige and above segment and popular segment de-grew 52% and 51% to Rs. 680 crore and Rs. 314 crore, respectively

- Gross margin declined 570 bps to 41.7% with Gross profit declining by 59% YoY to Rs. 429 crore. At the EBITDA level, the company reported a loss of Rs. 78 crore (I-direct estimate: loss of Rs. 70 crore) compared to a profit of Rs. 395 crore in Q1FY20

- In spite of interest cost marginally declining by 4% YoY to Rs. 50 crore, higher depreciation expense (up by 28% YoY to Rs. 64 crore) led to the company reporting a loss before tax and exceptional item of Rs. 182 crore v/s Profit before tax and exceptional items of Rs. 303 crore in Q1FY20

- During Q1FY21, the company has accounted Rs. 75 crore as exceptional expense on account of 'Raising the Bar' campaign which aims to provide non-cash support to qualifying pubs, bars and restaurants serving alcohol in major cities. Consequently, the company reported loss before tax of Rs. 257 crore. Tax write back to the tune of Rs. 42 crore curtailed the net loss for the quarter to Rs. 215 crore (Q1FY20: profit of Rs. 197 crore)

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

Shares of UNITED SPIRITS LTD. was last trading in BSE at Rs.589 as compared to the previous close of Rs. 590.9. The total number of shares traded during the day was 251239 in over 8287 trades.

The stock hit an intraday high of Rs. 591 and intraday low of 571.5. The net turnover during the day was Rs. 145896172.

Source : Equity Bulls

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