Buy United Spirits Limited Ltd for the Target Rs.1,110 by Choice Broking Ltd
UNITDSPR: Prince of Spirits, Backed by Diageo
Diageo, present in over 180 countries and owning major Spirits brands, is the largest promoter of UNITDSPR since taking a ~55% stake in 2013. It brought in strong supply chain and brand management systems, helping improve efficiency across UNITDSPR’s 30+ factories. Backed by Diageo’s global reach, UNITDSPR has gained access to procurement networks, distribution capabilities, and globally benchmarked quality control. We believe this partnership will further help UNITDSPR elevate its brand equity, strengthen leadership practices, and scale premium products with better positioning across global and domestic markets.
An Established Player Growing in Line with Industry Averages
Despite its push into premium segments with global brands like Johnnie Walker, Smirnoff, Signature, and Antiquity, UNITDSPR remains anchored by McDowell’s No. 1, which alone accounts for nearly 50% of total volumes. Positioned at the lower end of the premium spectrum, McDowell’s sells over 30Mn cases annually, making it the largest Whisky brand by volume globally. While premium and super-premium categories are growing across the industry, UNITDSPR’s Prestige & Above (P&A) segment which contributes ~87–88% of net revenue has grown at ~10% YoY in recent quarters, broadly in line with the market. Its revenue CAGR of 7.5% over FY22–25 underscores a mature, volume-heavy portfolio rather than high-margin-led growth.
Trade-Driven Tailwinds For UNITDSPR
The proposed India–UK Free Trade Agreement (FTA) is poised to be a tailwind for UNITDSPR, especially in the imported Spirits segment. Under existing regulations, imported Spirits in India attract high customs duty of 150%, inflating costs for Bottled-in-Origin (BIO) products, such as Johnnie Walker and Don Julio. The FTA is expected to gradually reduce these duties over a multi-year horizon (starting to have it at 75%), making premium imported brands more accessible to Indian consumers. This will directly benefit UNITDSPR, which distributes Diageo’s global BIO portfolio in India, enabling better pricing and margin expansion to some level. Additionally, the agreement may streamline the supply chain for Bottledin-India (BII) products by reducing input costs for bulk imports, particularly scotch malts and concentrates used in semi-premium blends.
Investment View
While we believe the fundamentals of the company and backing of Diageo UK bring plenty to the table, the valuations remain stretched. We therefore initiate coverage with a SELL rating and a target price of INR 1,110, based on our DCF model. Our valuation implies a ~37x / 32x PE on FY27E / FY28E EPS.
Key Risk: Larger EBITDA margin gains from UK FTA, Sharper uptick in volume due to new brands introduced from parent or Craft Spirits, sale of RCB franchise at rich valuations.
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SEBI Registration no.: INZ 000160131
