United Breweries - Q2FY21 Result Update - ICICI Direct

United Breweries reported an uptick in volume growth (76% QoQ growth, yet 48% YoY de-growth). Volumes of strong beer, recovered faster than mild beer. The recovery in volumes was further accompanied by a better state mix and certain cost control measures (lower other expenses), which led to better-than-expected EBITDA margins (4.5% vs. 4% estimated and a loss in Q1FY21) and led to absolute EBITDA in line with estimates (Rs. 40 crore). However, the company reported a PAT of Rs. 4 crore (vs. a loss of Rs. 114 crore in Q1FY21), above I-direct estimate of a loss of Rs. 26 crore, as the operational performance was boosted by other income of Rs. 32 crore.

Valuation & Outlook

The beer sector has seen multiple headwinds in FY20, FY21E, post registering 8% volume growth in previous five years. It stays 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 the 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 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_Q2FY21.pdf

Shares of UNITED BREWERIES LTD. was last trading in BSE at Rs.1025.95 as compared to the previous close of Rs. 1023.4. The total number of shares traded during the day was 2773 in over 323 trades.

The stock hit an intraday high of Rs. 1038.85 and intraday low of 1022.65. The net turnover during the day was Rs. 2853654.

Source : Equity Bulls

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