Neutral United Breweries; target of Rs 2000: Motilal Oswal

Motilal Oswal recommended Neutral rating on United Breweries with a target price of Rs 2000 in its research report dated February 14, 2025.

Broker Research

February 17, 2025 / 14:58 IST

Neutral

26 Aug, 2025 12:21

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Motilal Oswal's research report on United Breweries

United Breweries (UBBL) delivered revenue growth of 10% YoY (est. 12%), aided by policy changes in Andhra Pradesh (AP). Volume growth was 8% YoY (est. 6%). The Premium portfolio continued to deliver strong performance, posting 33% YoY growth (27% in 2QFY25). North, West, East and South regions reported volume growth of 16%, 4%, 3% and 8%, respectively. Volume growth was mainly driven by Telangana, AP, Uttar Pradesh, Maharashtra and Rajasthan. Meanwhile, Goa, West Bengal, Tamil Nadu and Kerala reported weak performance. GM contracted 90bp YoY/70bp QoQ to 43.1% (est. 43.8%). EBITDA margin contracted 90bp YoY to 7.1% (est. 9.1%). The company is strengthening its local brewing capabilities for premium products and improving the bottle recovery rates, supporting long-term margin growth. We estimate EBITDA margin of 11.6% in FY26 and 13% in FY27. The company remains focused on volume-led growth, along with share gain in the premium portfolio. It is planning to invest INR7.5b in a greenfield brewery in UP, which will produce both mainstream and premium brands, including Heineken, in cans and bottles. The facility will add 1.0-2.0 MHL capacity, which is expected to be ready by 4QFY27. We estimate a 13% revenue CAGR during FY25-27, led by high-single-digit volume growth.

Outlook

We maintain our Neutral rating on the stock with a TP of INR2,000 (based on 55x Dec’26E EPS).

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