United Spirits to see limited upside in FY24 operating margins, says CFO Jain

United Spirits expects operating margins would be in the mid-to-high teen digits over the next two-three years

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26 Aug, 2025 12:21

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There would be limited upside in operating margins over 15 percent in FY24, said Pradeep Jain, chief financial officer of United Spirits in its Q3FY24 earnings conference call.

United Spirits last quarter had guided a 15 percent operating margin for FY24.

Operating margins would be in the mid-to-high teen digits over the next two-three years for United Spirits, said Jain on January 24.

Margins would continue to be around the same level because of increased advertisement spends in the January-to-March quarter.

Increased advertisement spends is a move to market United Spirits' newly launched tequila brand, said Jain. In December, United Spirits launched Don Julio, a Mexican tequila brand in India.

The management said that there are discussions about the Indian Premier League and the Women’s Premier League being advanced to February and March and so the company wants to keep its advertisement spends intact during Q4FY24 as well.

“We want to remain absolutely salient during the cricket season,” said Jain.

The alco-beverage company will also be injecting some of the advertising spends in its popular category after the company lost volumes in the popular segment in the October-to-December quarter. The popular segment volumes fell 22.8 percent YoY in Q3FY24.

United Spirits' operating margin was at 16.4 percent in Q3FY24. The company's net profit increased 63 percent YoY to Rs 350 crore in the October-to-December quarter. Its revenue increased 5.3 percent YoY to Rs 6962 crore during the same period.

ALSO READ: United Spirts Q3 results: Net profit jumps 63% to Rs 350 crore

Input costs

The management said that inflation is largely restricted to Extra Neutral Alcohol (ENA) and other commodity prices have stabilized. The company has kept ENA inventory at a minimum level towards the end of the quarter and is in a wait and watch zone till prices settle down until the new crop enters the market.

On the other hand, glass prices are seeing a downward revision and is partially offsetting the ENA inflation, said the management.

Demand

Demand trends continue to remain weak despite festive season said the company. While consumers have limited their alcohol consumption, United Spirits is not seeing any downtrading in their products, said Hina Nagarajan, managing director and chief executive officer at United Spirits. “In the lower-end of the market people are not changing their brands but they’re lowering their occasion of drinking,” said Hina.

Weak demand is not a problem in premium liquor but volumes are.  People are preferring more out-of-home alcohol consumption and since the prices outside are expensive, volumes are affected, said Hina.

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