Motilal Oswal's research report on United Spirits
United Spirits (UNSP)’s 1QFY23 result was disappointing given complete ontrade normalcy for the quarter with 2% sales decline over 1QFY20 and around 5% P&A CAGR adjusted for some one-offs. As highlighted in our AlcoBev sector note, escalating material cost pressures, especially in the absence of requisite price increase from state governments, are putting immense pressure on profitability. Management has not indicated any respite over the next couple of quarters. While we are enthused by the structural implications of the strategic refresh, UNSP’s earnings outlook appears challenging. Maintain Neutral.
We maintain our Neutral rating with a TP of INR790, valuing the stock at 50x Jun‘24E EPS.
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