United Spirits Ltd shares soared 15% in intra-day trade on Tuesday after the manufacturer of McDowell whisky and Romanov vodka posted a better-than-expected 35% increase in net profit for the third quarter ended December (Q3).
United Spirits shares touched a high of Rs 663.30 apiece on Tuesday. At 3:04 pm, the stock was trading at Rs 657.40, up 14.2% from its previous close.
United Spirits, India’s largest liquor firm, on Monday said net profit stood at Rs 258.8 crore during the December quarter compared with Rs 192.4 crore a year ago. Total income was, however, flat at Rs 7,824.8 crore during the period.
At the operating level, earnings before interest, tax, depreciation and amortization (Ebitda) jumped 18% to Rs 424 crore compared with a year ago, while Ebitda margin grew by 207 bps to 16.4%.
“We saw a sequential improvement in the current quarter with overall sales growing 3%, led by our Prestige & Above portfolio growth of 8%, even as the broader consumption slowdown continued to weigh on the overall business,” Anand Kripalu, CEO of United Spirits, said in a stock exchange filing. “We remain committed to our medium-term ambition of growing the top line by double-digits and to improve Ebitda margin to mid-high teens,” he added.
After the earnings, global brokerage firm Credit Suisse upgraded the United Spirits stock to ‘outperform’ from ‘neutral’, with a target price of Rs 700 per share.
The brokerage firm said that the near-term pressures for United Spirits are now fully priced in and the risk-reward ratio has turned favourable. The stock now trades at a 10-20% discount to FMCG Stocks like Dabur, Godrej Consumer Products Ltd and Britannia.
Going ahead, Credit Suisse expects key triggers for the stock will be lowering of input costs or price hikes in key states.