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Strong earnings momentum
United Spirits’ 4Q net earnings grew by a strong 36% YoY to Rs774m, in-line
with our estimates. Volume momentum continued (+12%) during 4Q; ENA
prices were higher than estimates, though, were offset by lower financial
charges. The 3%+ weighted average price hike in Apr-11, along with savings
from recent acquisitions provide high earnings visibility for FY12. FY11
consolidated net profit of Rs6.3bn was buoyed up due to one-offs and we
maintain our below-consensus estimates.
4Q earnings in line with our estimates
UNSP’s 4Q Ebitda (standalone) rose 17.5% YoY to Rs2.1bn, 8% lower than our
estimates due to higher input costs (ENA prices). Reported Ebitda margins
declined 115bps YoY, though, adjusted for Balaji merger, margins were almost
flat. Lower than expected below finance charges helped net earnings grow 36%
YoY to Rs774m - in-line with our estimates. During FY12, Whyte & Mackay
generated an Ebitda of GBp30m, in-line with the management guidance.
ENA prices continue to rise; product price hikes, cost savings to help
ENA costs increased by 5% QoQ to Rs150/case against our expectation of flat
QoQ. While the management continues to guide for Rs135/case of ENA cost
during FY12, we build in a higher Rs140/case in our estimates. Packaging material
costs (largely glass) has moved up by c.8% but the 3%+ weighted average
product price hikes already effected during Apr-11 (some large states in the south
still remain) should offset the packaging cost increases. Additionally, acquisition of
distilleries should easily drive Rs120m/quarter of savings from 3QFY12 onwards
and some savings is expected in A&P expenditure as well.
Consol PAT better due to one-offs, no change in consol estimates
United Spirits’ FY11 consolidated net profit Rs6.3bn was much better than
expected due to forex gains of Rs1.9bn and lower interest costs of Rs5bn (due to
hedging benefits). Additionally, rising interest rates regime in UK helped reverse
pension and lease provisioning of Rs270m. The operating ebitda, however, was
flat YoY at Rs12bn was below estimates.
Consol debt stable QoQ, should remain flat YoY by Mar’12
UNSP’s consol. net debt increased by Rs400m QoQ to Rs57bn. We expect
Mar’12 net debt at a similar Rs57bn due to Rs3bn capex on backward
integration. The company is also in the process of refinancing W&L loan which
would further push back the maturities by 5-7 years but will result one-time
refinancing costs of around GBp5m.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Strong earnings momentum
United Spirits’ 4Q net earnings grew by a strong 36% YoY to Rs774m, in-line
with our estimates. Volume momentum continued (+12%) during 4Q; ENA
prices were higher than estimates, though, were offset by lower financial
charges. The 3%+ weighted average price hike in Apr-11, along with savings
from recent acquisitions provide high earnings visibility for FY12. FY11
consolidated net profit of Rs6.3bn was buoyed up due to one-offs and we
maintain our below-consensus estimates.
4Q earnings in line with our estimates
UNSP’s 4Q Ebitda (standalone) rose 17.5% YoY to Rs2.1bn, 8% lower than our
estimates due to higher input costs (ENA prices). Reported Ebitda margins
declined 115bps YoY, though, adjusted for Balaji merger, margins were almost
flat. Lower than expected below finance charges helped net earnings grow 36%
YoY to Rs774m - in-line with our estimates. During FY12, Whyte & Mackay
generated an Ebitda of GBp30m, in-line with the management guidance.
ENA prices continue to rise; product price hikes, cost savings to help
ENA costs increased by 5% QoQ to Rs150/case against our expectation of flat
QoQ. While the management continues to guide for Rs135/case of ENA cost
during FY12, we build in a higher Rs140/case in our estimates. Packaging material
costs (largely glass) has moved up by c.8% but the 3%+ weighted average
product price hikes already effected during Apr-11 (some large states in the south
still remain) should offset the packaging cost increases. Additionally, acquisition of
distilleries should easily drive Rs120m/quarter of savings from 3QFY12 onwards
and some savings is expected in A&P expenditure as well.
Consol PAT better due to one-offs, no change in consol estimates
United Spirits’ FY11 consolidated net profit Rs6.3bn was much better than
expected due to forex gains of Rs1.9bn and lower interest costs of Rs5bn (due to
hedging benefits). Additionally, rising interest rates regime in UK helped reverse
pension and lease provisioning of Rs270m. The operating ebitda, however, was
flat YoY at Rs12bn was below estimates.
Consol debt stable QoQ, should remain flat YoY by Mar’12
UNSP’s consol. net debt increased by Rs400m QoQ to Rs57bn. We expect
Mar’12 net debt at a similar Rs57bn due to Rs3bn capex on backward
integration. The company is also in the process of refinancing W&L loan which
would further push back the maturities by 5-7 years but will result one-time
refinancing costs of around GBp5m.
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