United Breweries - Q1FY21 Result Update - ICICI Securities

Net revenues for Q1FY21 de-grew 75% YoY to Rs. 507 crore led by a steep decline in Q1 volumes (down 77%) led by Covid impact. Gross margins de-grew 360 bps to 46.7% due to adverse product mix. Hence, due to lower operating leverage, absolute EBITDA came at a loss of Rs. 96 crore. UBL reported PAT loss of Rs. 114 crore but this was above I-direct estimate of loss of Rs. 124 crore, as weak operational performance was negated, to an extent, by lower depreciation expense and tax write-back of Rs. 38 crore. Covid-19 led to complete shutdown of outlets from March 23-May 3 but parts of trade including on-premise outlets remained close for the entire quarter. The volume impact was higher on strong beer compared to mild beer.

Valuation & Outlook

The beer sector saw multiple headwinds in FY20 and FY21E, post registering 8% volume growth in previous five years. It remains an underpenetrated segment (12% market share in alcohol consumed), a preferred choice of ready to drink product for the youth and, thus, has long term growth potential (in a landscape historically dominated by liquor). Although concerns remain like changes in behaviour of consumers due to the pandemic, the management has displayed discipline and prudence when dealing with evolving customer needs via broad portfolio and wide reach. We maintain our BUY rating on the stock with a target price of Rs. 1120.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_UnitedBreweries_Q1FY21.pdf

Shares of UNITED BREWERIES LTD. was last trading in BSE at Rs.975 as compared to the previous close of Rs. 964.6. The total number of shares traded during the day was 82824 in over 2814 trades.

The stock hit an intraday high of Rs. 976.6 and intraday low of 945.25. The net turnover during the day was Rs. 79346645.

Source : Equity Bulls

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