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Motilal Oswal Report
United Spirits Ltd. declared dismal Q1 FY21 Ebitda/net loss (lower than our expectations).
Importantly, the recovery outlook remains cloudy, especially with on-trade restaurants, bars and pubs -- which contribute approximately 25% of sales -- expected to remain closed for the next few months.
Standalone net sales declined 53.6% YoY to Rs 10.3 billion (versus estimate Rs 9.3 billion). After adjusting for one-time bulk Scotch sales last year, underlying net sales declined 51%.
Ebitda stood at Rs 776 million (versus estimtae Rs 1 billion and Rs 4 billion in Q1 FY20).
Advertisement spends were down 69.7% on an absolute basis. Reported profit before tax stood at Rs 1.8 billion (versus estimate Rs 1.8 billion and Rs 3.1 billion in Q1 FY20).
Adjusted profit after tax stood at Rs 1.4 billion (versus estimate Rs 1.8 billlion and Rs 2 bilion in Q1 FY20).
Further, premium and above segment is likely to underperform (unlike previous years) leading to mix deterioration. Also, the full impact of the sharp excise hikes by various states would be felt Q2 FY21 onwards.
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