United Spirits - Recovery Evident In Q3, Albeit Slower Than Expected: Motilal Oswal
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Motilal Oswal Report
In Q3 FY21, United Spirits Ltd. reported further sequential improvement in all parameters on the path to recovery to normalcy.
While on-trade sales would take a few quarters to normalise, in-home consumption remains buoyant.
Recovery in Q3 FY21 was, nevertheless, slower than our expectation – leading to approximately 15% cut in FY21 earning per share.
However, the reduction in FY22 and FY23 EPS forecasts is much lower at ~3% each.
1. Gradual demand recovery, 2. benign commodity costs, 3. the resumption of premiumisation, 4. stagnant working capital (quashing earlier fears), and 5. continued debt repayments augur well for continued healthy earnings growth beyond FY21.
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