Company Update : United Spirits Ltd by Motilal Oswal Financial Services Ltd
Beat in performance; all-time high operating margins
Standalone performance
* Standalone net sales up 11.5% YoY to INR31.7b (est. INR30.4b) in 2QFY26 on weak base of 1% decline in 2QFY25.
* Growth was supported by its re-entry into Andhra Pradesh and the strong performance of innovation and renovation launches, partially offset by adverse policy changes in Maharashtra.
* Total volume rose 8% (est. 6%), with P&A volume increased 8% YoY (est. 6% YoY, 9% in 1QFY26) to 13.9m cases. Popular volume rose 6% YoY (est. 5% YoY, 12% in 1QFY26) to 2.7m cases.
* P&A revenue (90% revenue mix) rose 12% YoY and Popular revenue grew 9% YoY.
* Gross margin saw a sharp expansion of 190bp YoY to 47.1% (est. 45.2%, 44% in 1Q).
* GP margin expansion was led by last year’s headline pricing, ongoing revenue growth management initiatives, an improved product mix, sustained productivity gains, and relatively stable input cost inflation across key commodities.
* Employee expenses rose 8%, other expenses rose 13%, while A&P spends declined 6%.
* EBITDA margin expanded 340bp YoY to 21.2% (est. 18.5%), recording an alltime high.
* EBITDA rose 32% YoY to INR6.7b (est. INR5.6b).
* PBT increased 48% YoY to INR6.6b (est. INR5.1b).
* APAT rose 48% YoY to INR4.9b (est. INR3.8b).
* There was an exceptional item of INR300m toward severance costs related to a closing unit.
* In 1HFY26, net sales, EBITDA and APAT grew 10%, 13%, and 25%
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