Heineken's India Business Sees 20% Growth Between January And March
Increased sales and a positive price mix strategy led to growth in the beermaker's India business, it said.
Heineken's India business—under United Breweries Ltd.—saw 20% growth in the first quarter of calendar year 2024, on the back of increased sales and positive price mix strategy, the company said in a business update.
"Beer volume grew in the low-teens, ahead of the market, cycling route-to-market changes from last year. To celebrate International Women's Day, we introduced Queenfisher, an all-women initiative. Our premium portfolio grew volume in the low-twenties, led by Kingfisher Ultra and Heineken Silver," it said.
Kingfisher's volume growth beat estimates, according to Elara Securities Ltd. The brokerage had pegged the growth at 10% year-on-year for the quarter. The brokerage attributed the growth to market share gains in North India, stable market share in South India, and a surge in volume of the premium portfolio, due to a strategic push by Heineken.
Elara Securities projects FY24E volume to reach 191 million, with a growth of 2.4% YoY and a compound annual growth rate of 2.5% over FY20-24.
Volume CAGR is expected at 7.5% over the next two years (FY24-26E), it said. It also sees revenue and earnings increasing 3-6% in FY26.
However, challenges persist for UBBL in terms of Ebitda margin pressure, due to investments in Heineken and the premium beer segment. Despite a 400 basis points improvement projected in gross margin over the next two years, Elara Securities cautions that these levels will remain significantly below pre-Covid levels—340 basis points lower in FY26E— compared to pre-Covid margin.
But the brokerage remains optimistic for UBBL in the medium- to long-term perspective. A consistent improvement in gross and Ebitda margin, coupled with strong volume growth, will likely drive further upgrades for the stock in the future.