Moneycontrol
Feb 14, 2017 06:32 PM IST | Source: Moneycontrol.com

Buy United Breweries; target of Rs 1044: Motilal Oswal

Motilal Oswal is bullish on United Breweries has recommended buy rating on the stock with a target price of Rs 1044 in its research report dated February 09, 2017.

 
 
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Motilal Oswal's research report on United Breweries


EBITDA margin contracted 360bp YoY, over unusually high base of 16.0% margin in 3QFY16, led by a 450bp decline in gross margin. Staff costs increased by 80bp YoY and sales & distribution costs by 140bp YoY, partly offset by lower other expenses (-310bp YoY).


Outlook


Long-term volumes/earnings growth opportunities (FY16 PAT at USD45m) are immense for India’s largest beer player with strong barriers to entry in the form of distribution, brewery reach, scale and brands. Maintain Buy with TP of INR 1,044. We continue to value UBBL on 35x Dec-18 cash EPS.

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