United Spirits Ltd. share price target

UNSP’s two transactions of brand sales (slump sale + franchising (for now)) is an attempt to free organisation’s resources on what can add more value in the longterm. Classic case of: “What not to do is more important than what to do?” given resources are constrained in real life. In our opinion, (select) part of the street getting concerned on no immediate (optical) benefit, is too myopic.

We remain positive on the long term growth prospects of the stock and maintain our BUY recommendation Target Price and Valuation: We value USL at | 1050 i.e. 52x P/E on FY24E EPS...

UNSP's 3QFY22 performance came in below our estimates. Unlike other Discretionaries, its weak two-year average sales, EBITDA, and PAT (6-8% range) was despite a near normal quarter. This is especially disappointing given the context of relatively softer input cost inflation, a highly favorable tax environment (no excise increases in the FY22 state budgets), and higher than usual realization led sales growth. It is fairly certain that these factors may not be as favorable going ahead. It is also important to note that any steep material cost increases cannot be...

At an inflection point of decadal...

Consequent PAT doubled to | 273 crore, which includes one-off reversal benefit in the interest expense What should investors do? With its broad portfolio and focus on placing existing brands in the upper prestige segment, along with introduction of its several iconic brands from Diageo stable, USL is well placed to capitalise on the rapidly growing...