United Breweries stock jumps over 6% despite sharp decline in Q3 net profit

United Breweries' stock price has gained almost 10 percent in the last three months.

Shares of United Breweries (UBL) gained as much as 6.6 percent to Rs 2,166 in morning trade on February 14 even as its third-quarter results fell short of investor expectations. The stock rallied at open but quickly erased most gains to trade marginally higher.

At about 9:40 am, shares of the company were trading at Rs 2,056, higher by 1.4 percent from the last close on the NSE. United Breweries' stock price has gained almost 10 percent in the last three months.

This comes despite the alcohol major posting a 54.9 percent year-on-year decline in net profit for the third quarter of FY25, with earnings slipping to Rs 38.3 crore from Rs 84.9 crore in the same period last year. However, the drop in profit was largely due to an exceptional loss of Rs 25.8 crore, which weighed on the bottom line.

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Revenue from operations, however, climbed 9.6 percent year-on-year to Rs 1,998.4 crore from Rs 1,822.7 crore in the same quarter of the previous year, supported by higher sales volumes and a better product mix.

EBITDA fell 3.1 percent to Rs 141.2 crore from Rs 145.7 crore in Q3FY24, reflecting the impact of higher input and operational costs. Operating margins narrowed to 7.1 percent from 8 percent a year ago, signalling margin pressures despite revenue growth. EBITDA is earnings before interest, tax, depreciation and amortization.

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A subsidiary of the Heineken Group, United Breweries dominates India’s beer market with brands like Kingfisher and Heineken. While sales remained strong, profitability took a hit due to rising costs and one-time losses.

This comes just a few days after Anand Rathi maintained a 'Buy' rating on the stock and raised its target price. This comes amid Telangana's announcement of a beer price hike. Telangana, which contributes around 15 percent of United Breweries' revenue, officially approved a 15 percent hike in beer prices. This decision covers both existing stocks at depots and beer in transit. The price adjustment will be applied to all current and future inventory, and the hike is expected to positively impact UBL's revenues in the region.

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Telangana, a crucial market for UBL, accounts for a significant portion of the company's market share, with UBL holding a dominant 60 percent share in the state's beer market.

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