Q3FY21 Result Update - United Breweries - ICICI Direct

United Breweries (UBL) continued its upward performance trajectory in Q3FY21, leading to 85% normalisation in volumes (up 31% QoQ). The recovery in volumes was further assisted by a better state mix and benign input costs, leading to better-than-expected EBITDA margins (13.4% vs. 9% estimated and 4.5% in Q2FY21). Also, adjusting for the Rs. 23 crore non-recurring provision created for doubtful debtors/potential expiry of stock, EBITDA margins reached 15.6% levels. Subsequently, absolute EBITDA came in at Rs. 174 crore (up 3.3 x QoQ but down 21% YoY). The company also recorded an exceptional income of Rs. 55 crore due to transfer of its rights and interest in a leasehold land property.

Valuation & Outlook

UBL continues to have a robust balance sheet with virtually debt free position (net cash of Rs. 97 crore) by building up a stronger WC position, cost control measures and lowered capex requirement. It also has dominant 52-53% market share in the beer sector. The management has also displayed discipline and prudence when dealing with evolving customer needs via broad portfolio and wide reach. Being an underpenetrated segment (per capita ~2 litre consumption) and a youth centric status of ready to drink social drink, enables the sector to have long term growth potential. We maintain BUY rating on the stock with a revised target price of Rs. 1490 (earlier Rs. 1120).

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_UnitedBreweries_Q3FY21.pdf

Shares of UNITED BREWERIES LTD. was last trading in BSE at Rs.1298.85 as compared to the previous close of Rs. 1283.25. The total number of shares traded during the day was 31529 in over 2032 trades.

The stock hit an intraday high of Rs. 1317 and intraday low of 1273.4. The net turnover during the day was Rs. 40865747.

Source : Equity Bulls

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