United Spirits share price rises 2% after CRISIL revises outlook
The outlook revision reflects the expectation of improvement in USL's credit profile, commensurate with better cash accrual and leverage over the medium-term, CRISIL said.
December 31, 2019 / 10:09 AM IST
Shares of United Spirits climbed 2 percent on BSE in morning trade on December 31, a day after the company said CRISIL had revised its outlook on the company's long-term bank facilities and non-convertible debentures (NCDs).
"CRISIL has revised its outlook on the long-term bank facilities and non-convertible debentures of United Spirits Limited (USL) to 'Positive' from 'Stable' while reaffirmed the rating at 'CRISIL AA+'. The short-term rating and commercial paper have been reaffirmed at 'CRISIL A1+'," CRISIL said.
The outlook revision reflects the expectation of improvement in USL's credit profile, commensurate with better cash accrual and leverage over the medium-term, the rating agency added.
USL's standalone earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin improved to 18 percent in the first half of fiscal 2020 (14.3 percent in fiscal 2019) from 12.6 percent in fiscal 2018. The improvement in operating margin is driven by the increasing share of the premium segment, optimisation of operating overheads, and employee costs, CRISIL said.
USL has been particularly successful in gradually shifting its product portfolio towards the luxury, premium, and prestige segments.
As per CRISIL, these segments inherently have a better margin and are more price inelastic, enabling USL to increase the prices and, thus, realisations.
The share of prestige and above segments in net sales increased to 67 percent in the first half of fiscal 2020 (63 percent in fiscal 2019) from 58 percent in fiscal 2018.
Shares of United Spirits traded 1.91 percent up at Rs 603.60 on BSE around 09:55 hours IST.