United Spirits - Hopeful Of Inflationary Pressures Abating From Q4: Nirmal Bang

Nirmal Bang Report

We recently interacted with the management of United Spirits Ltd. to understand the current business environment and to get an update on its strategic initiatives. Given below are the key highlights:

There is no change in the demand momentum apart from the quarterly vagaries, especially at the top end of the portfolio. The management believes that the pace of upgrades from the Popular segment to the lower-Prestige segment might be under pressure, but the hypothesis needs to be confirmed over the next few months.

The Indian wedding season is back and the weddings are being held in a much bigger way after going through some sort of a lull during the Covid-19 period. United Spirits is not seeing any signs of downtrading currently.

The last four quarters have seen growth being driven by two states that had undergone an route-to-market change in the last quarter of CY21. Since Delhi is reverting to the earlier RTM, there is likely to be an adverse impact going forward. United Spirits will also start seeing normalised growth in West Bengal as the benefit from the new RTM comes into the base.

Scotch supplies got normalised to some extent in Oct-22-Nov-22 and will get fully normalised only in Q4 FY23. Q3 FY23 will also be the first quarter post the divesture of the Popular portfolio and hence the net sales will be lower by ~Rs 3.5-4 billion.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.