CRISIL reaffirms ratings of United Spirits Ltd

CRISIL has reaffirmed its 'CRISIL AA+ / Positive / CRISIL A1+' ratings on the bank facilities and debt programmes of United Spirits Ltd (USL). CRISIL has withdrawn its rating on the commercial paper of Rs 1000 crore at the company's request as there was no outstanding against the facility. The withdrawal is in line with CRISIL's policy. (see Annexure 'Details of Rating Withdrawn' for details).

The ratings continue to reflect the company's leadership position in the spirits industry in India, strong and diversified product portfolio, and the operational and technical support it receives from parent Diageo Plc (rated 'A-/Stable/A2' by S&P Global Ratings [S&P]). These strengths are partially offset by vulnerability to regulatory changes.

In the quarter ended June 30, 2020, operating performance was significantly impacted by the Covid-19 pandemic with operating income declining 58% and operating loss of Rs 92 crore. The quarter ended September 30, 2020, saw significant recovery with operating income rising more than 100% over the previous quarter and operating margin improving to around 13%.

The first half of fiscal 2021 saw a 32% decline in operating income to Rs 3,228 crore and a fall in operating margin to 8.6% from 19.1% in the first half of fiscal 2020 due to the operating loss incurred in the first quarter.

However, the financial risk profile remained healthy with total debt reducing to around Rs 1,580 crore as on September 30, 2020, from Rs 2,374 crore as on March 31, 2020, driven by better working capital management and healthy accruals in the second quarter of fiscal 2021.

Shares of UNITED SPIRITS LTD. was last trading in BSE at Rs.577.45 as compared to the previous close of Rs. 570.5. The total number of shares traded during the day was 77735 in over 2475 trades.

The stock hit an intraday high of Rs. 580.5 and intraday low of 571.7. The net turnover during the day was Rs. 44809448.

Source : Equity Bulls

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