United Spirits Jumps 14% A Day After Announcing Q3 Earnings

Shares of United Spirits Ltd. rose the most in nearly four months a day after the company announced its earnings for the quarter ended December.

The quarterly profit of India’s largest spirits maker met estimates as productivity improved on lower employee costs.

The benefits of improved productivity are expected to sustain in the future, Sanjeev Churiwala, the company’s chief financial officer, said today at a post-earnings conference.

The company said its margin in the three-month period rose over the previous year despite higher raw material costs.

Shares of United Spirits rose nearly 14 percent today compared with the NSE Nifty 50’s 0.5 percent decline.

Earnings Highlights (Q3, YoY)

• Net sales rose 3 percent to Rs 2,588 crore.
• Ebitda margin rose to 16.5 percent versus 14.2 percent.
• Net profit rose 15 percent to Rs 235 crore.

Highlights Of Earnings Call

• A 3 percent growth in revenue was aided by ‘Prestige & Above’ (P&A) segment—which contributes 66 percent to net sales.
• Volumes and sales of the segment rose 3 percent and 8 percent, respectively.
• A mix of higher-priced brands, including premium scotch, aided sales. Yet, the company said the segment remained under pressure due to lower demand.
• Volumes of USL’s ‘popular’ segment declined nearly 6 percent, with sales falling 5 percent on an annual basis. The segment accounts for 30 percent of net sales.
• It was difficult to have an outlook on demand for products, the company said, adding that it expects its efforts and investments on marketing to pay dividends, especially in the P&A segment.
• Demand environment is difficult to read, USL said.
• The company’s Ebitda margin widened despite a 420-basis-point decline in gross margin.