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Healthy revenue growth; weak operating margins

* UBBL’s standalone net sales grew 10% YoY to INR20.0b (est. INR20.4b).

* Volume growth was 8% YoY (est. 6%), with premium segment volume growing strongly by 33% YoY.

* North/West/East/South regions posted 16%/4%/3%/8% volume growth.

* Gross margin declined 90bp YoY and 70bp QoQ to 43.1% (est. 43.8%, 43.8% in 2QFY25).

* Employee expenses grew 6% YoY, while other expenses rose 11% YoY, led by investments in supply chain ahead of the peak season.

* EBITDA margin contracted 90bp YoY to 7.1% (est. 9.1%, 10.7% in 2QFY25).

* EBITDA declined by 3% YoY to INR1.4b (est. INR1.9b).

* Higher depreciation (+18%) and lower other income (-58%) resulted in a 25% YoY fall in PBT.

* There was an exceptional item of INR258m on account of severance pay to employees on separation.

* APAT fell 24% YoY to INR640m (est. INR1,124b). Reported PAT declined 55% YoY to INR383m.

* In 9MFY25, net sales/EBITDA/APAT grew by 10%/18%/13%.

Other key highlights

* UBBL is investing INR7.5b in a greenfield brewery in UP, set to produce both mainstream and premium brands, including Heineken, in cans and bottles. The facility will add 1.0–2.0 MHL capacity, expected by 4QFY27.

* Net sales were driven by volume growth, price increases and positive mix.

* Volume growth was mainly driven by Telangana, Andhra Pradesh, Uttar Pradesh, and Rajasthan, partially offset by Tamil Nadu and West Bengal.

* Positive price mix was driven by price increases in multiple states and mix from premiumization, partially offset by growth in the economy segment and negative state mix.

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