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Standalone earnings marginally better than expected; consolidated
results weak: United Spirits reported 1Q FY12 Sales, EBITDA and
PAT growth of 32%, 17% and 14% y/y respectively on a standalone
basis. Adjusting for the Balaji distilleries merger, LTL Net Sales grew
22% y/y. Gross margin pressures were offset to some extent by a
moderate increase in advertising and promotional spends during the
quarter. However, consolidated Sales, EBITDA and PAT growth was
40%, 16% and 6% y/y, respectively, affected by lower profitability for
Whyte & Mackay.
Healthy volume growth of 15.4% y/y during 1Q FY12 is encouraging,
though supported to some extent by a favorable base. LTL price/mix
growth was ~7% y/y on account of price increases and better mix.
Gross margin erosion mitigated by lower trade spends: ENA costs at
Rs147/case were up 3% y/y, although they declined by ~2% q/q. While
higher ENA and glass costs weighed on gross margins, the reduction in
promotional trade spends supported EBITDA margins to some extent.
Management noted that it expects an increased share of in-house
distillation facilities and grain feedstock to help contain/improve gross
margins going forward. However it expects brand spends to increase in
coming quarters on account of impending new product launches.
Rising debt levels and interest costs a concern: Consolidated debt rose
to Rs68B (+Rs4B q/q) largely on account of higher working-capitalrelated
loans. Standalone interest costs rose sharply (+27% y/y, +18%
q/q) on account of the higher cost of domestic borrowing and higher
working capital debt. On a consolidated basis interest costs rose 10% y/y.
Whyte & Mackay posts weak margins: While W&M reported Net
Sales growth of 34% y/y during 1Q FY12, EBITDA declined 30% y/y.
Gross margins declined by 10% ppt y/y with a similar reduction in
EBITDA margins
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Standalone earnings marginally better than expected; consolidated
results weak: United Spirits reported 1Q FY12 Sales, EBITDA and
PAT growth of 32%, 17% and 14% y/y respectively on a standalone
basis. Adjusting for the Balaji distilleries merger, LTL Net Sales grew
22% y/y. Gross margin pressures were offset to some extent by a
moderate increase in advertising and promotional spends during the
quarter. However, consolidated Sales, EBITDA and PAT growth was
40%, 16% and 6% y/y, respectively, affected by lower profitability for
Whyte & Mackay.
Healthy volume growth of 15.4% y/y during 1Q FY12 is encouraging,
though supported to some extent by a favorable base. LTL price/mix
growth was ~7% y/y on account of price increases and better mix.
Gross margin erosion mitigated by lower trade spends: ENA costs at
Rs147/case were up 3% y/y, although they declined by ~2% q/q. While
higher ENA and glass costs weighed on gross margins, the reduction in
promotional trade spends supported EBITDA margins to some extent.
Management noted that it expects an increased share of in-house
distillation facilities and grain feedstock to help contain/improve gross
margins going forward. However it expects brand spends to increase in
coming quarters on account of impending new product launches.
Rising debt levels and interest costs a concern: Consolidated debt rose
to Rs68B (+Rs4B q/q) largely on account of higher working-capitalrelated
loans. Standalone interest costs rose sharply (+27% y/y, +18%
q/q) on account of the higher cost of domestic borrowing and higher
working capital debt. On a consolidated basis interest costs rose 10% y/y.
Whyte & Mackay posts weak margins: While W&M reported Net
Sales growth of 34% y/y during 1Q FY12, EBITDA declined 30% y/y.
Gross margins declined by 10% ppt y/y with a similar reduction in
EBITDA margins
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