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Last Updated : Jan 28, 2016 08:04 AM IST | Source: CNBC-TV18

United Spirits Q3 profit may surge 67% on lower interest cost

Operating profit (earnings before interest, tax, depreciation and amortisation) is likely to increase 22 percent on yearly basis to Rs 291 crore and margin may expand 200 basis points to 12.2 percent in quarter gone by.


Alcoholic beverages company United Spirits is expected to report good performance in third quarter earnings on a low base in year-ago period. Profit is seen rising 67 percent year-on-year to Rs 132 crore and revenue may increase 1.8 percent to Rs 2,360 crore during the quarter, according to analysts polled by CNBC-TV18. Profit may get support from lower interest cost.


Operating profit (earnings before interest, tax, depreciation and amortisation) is likely to increase 22 percent on yearly basis to Rs 291 crore and margin may expand 200 basis points to 12.2 percent in quarter gone by.


In fact, the company has been reporting good improvement in operational performance with margin rising from 6.3 percent in Q4FY15 to 14.8 percent in Q2FY16 as Diageos strategy is bearing fruit.

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Analysts expect overall volume growth at around 3 percent (against negative 2.6 percent in Q2FY16, 0.4 percent in Q1, negative 0.6 percent in Q4FY15 and negative 1.8 percent in Q3FY15) with prestige segment showing 8.5 percent growth in Q3 led by re-launch of MCDowell No 1 and Royal Challenge.


They expect sales from Diageo brands to contribute Rs 150 crore during the quarter. Hence, pricing growth may be in range of 7-8 percent led by better mix and inclusion of Diageo brand sales.

Gross margin expansion may be led by measures taken by company and steady extra neutral alcohol (ENA) prices. Analysts feel advertising and promotion expenses may pick up sequentially on the back of re-launch spends and festive quarter.

First Published on Jan 27, 2016 10:54 am
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