JPMorgan maintains overweight on United Spirits, raises target price to Rs 2,685
JPMorgan expects prestige brands volume and value to rise to 51 percent and 69 percent respectively by FY20 against 41 percent and 58 percent respectively in FY17.
Global research firm JPMorgan has maintained overweight rating on United Spirits and increased its price target on the stock to Rs 2,685 from Rs 2,640 per share earlier.
Impact on sales due to highway ban is moderating and GST impact on margins has been less than expected, it said.
The research house expects long-term margin gains led by interest cost reduction and better working capital management.
EBITDA margin is expected to expand by 260 basis points to 14.1 percent by FY20 and revenue will grow at CAGR of 12 percent over FY18-20 with expected franchise income at Rs 150 crore per annum, JPMorgan said.
It further said improvement in revenue mix remains core to growth strategy.
The research house expects prestige brands volume and value to rise to 51 percent and 69 percent respectively by FY20 against 41 percent and 58 percent respectively in FY17.United Spirits share price closed at Rs 2,377, up Rs 28.45, or 1.21 percent on the BSE.