Apr'25 View on United Spirits Ltd

Diageo India incorporated in India as United Spirits Ltd.(USL) is the country’s leading beverage alcohol company and a subsidiary of global leader Diageo PLC. The company manufactures, sells, and distributes a wide portfolio of premium brands such as Johnnie Walker, Black Dog, Black & White, VAT 69, Antiquity, Signature, Royal Challenge, McDowell’s No.1, Smirnoff and Captain Morgan. Analysis • UNSP reported 10%/15% volume/value growth in Q3FY25. • A smooth CEO transition and consistency in execution are the key. • We expect earnings to grow by 16.4% in FY26E & grow by 15.5% in FY27E. • Stock is currently trading at valuation of 58.3x P/E FY27E EPS. • We trim revenue growth/EBITDA margin forecasts revise FV to Rs1,480. Positives: • UNSP’s net revenue grew 15% yoy to Rs3432 cr (in line). • Volumes grew 10.2% yoy to 18.2 mn cases (1.6% beat). • Fast scale-up of the AP (Andhra) market (contributed 610 bps to growth). • Popular portfolio volume/value grew 6%/9.5% (KIE: 3.5%/5% yoy). • Gross Margins stood at 44.7% (KIE: 44.3%), up 130 bps yoy. Negatives: • Recent weakness in urban consumption poses downside risk to FY26E.