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Robust volume growth; pricing power visible
United Breweries’ (UBL) Q4FY11 revenue jumped 46.5% Y-o-Y to INR 8.39 bn.
While EBITDA soared 59.4% Y-o-Y to INR 1.04 bn, PAT increased 53.3% to INR
401 bn. For FY11, revenue surged 41% to INR 27.78 bn, while PAT catapulted
73% to INR 1.68 bn for the standalone business. Robust volume growth of 23%
was recorded in FY11 driven by 27% growth in strong beer and a healthy 16%
increase in mild volumes against industry growth in mild beer of 9%. Growth was
driven by high value markets of Maharashtra, Karnataka and Eastern India which
helped improve realisation per case.
Market leadership maintained in high barrier entry business
Market share at end FY11 was highest ever at 56%. For FY11, the company’s
market share stands at 54% versus 51% in FY10. The company’s Kingfisher,
block-buster brand, is thrice the nearest brand in terms of market share. The beer
market in India faces several regulatory challenges, like duty is not set according
to alcohol content, advertising on alcohol is not allowed, and several state
governments control the price increases in liquor. UBL has manufacturing facilities
in almost all states with an excellent distribution network, which serves as high
entry barrier in the alcoholic beverages business.
Heineken effects visible; reaping dividends of recent initiatives
Recently, UBL launched Kingfisher Ultra beer, packaged in a distinctive embossed
bottle with a ring pull crown. In addition to providing a distinct image, an
embossed bottle also reduces the sourcing cost as the company is able to cheaply
source it from glass vendors, in absence of other buyers. Introduction of
proprietary bottles has been completed in half of the market and significant
benefits are visible. The mergers of ABDL, MAPL and Empee into UBL have been
completed, and the schemes of MBIL, UMBL, UB Nizam, UB Ajanta and Chennai
Breweries are progressing as planned.
Outlook: Positive; not rated
We are confident on UBL’s robust volume growth on back of a) increase in
working population (net increase in working age population is expected to be
~270 mln till 2030) b) more liberal views on alcohol of the emerging young
population, and c) increase in number of licensed retail outlets. We do not have a
rating on United Breweries (UBL).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Robust volume growth; pricing power visible
United Breweries’ (UBL) Q4FY11 revenue jumped 46.5% Y-o-Y to INR 8.39 bn.
While EBITDA soared 59.4% Y-o-Y to INR 1.04 bn, PAT increased 53.3% to INR
401 bn. For FY11, revenue surged 41% to INR 27.78 bn, while PAT catapulted
73% to INR 1.68 bn for the standalone business. Robust volume growth of 23%
was recorded in FY11 driven by 27% growth in strong beer and a healthy 16%
increase in mild volumes against industry growth in mild beer of 9%. Growth was
driven by high value markets of Maharashtra, Karnataka and Eastern India which
helped improve realisation per case.
Market leadership maintained in high barrier entry business
Market share at end FY11 was highest ever at 56%. For FY11, the company’s
market share stands at 54% versus 51% in FY10. The company’s Kingfisher,
block-buster brand, is thrice the nearest brand in terms of market share. The beer
market in India faces several regulatory challenges, like duty is not set according
to alcohol content, advertising on alcohol is not allowed, and several state
governments control the price increases in liquor. UBL has manufacturing facilities
in almost all states with an excellent distribution network, which serves as high
entry barrier in the alcoholic beverages business.
Heineken effects visible; reaping dividends of recent initiatives
Recently, UBL launched Kingfisher Ultra beer, packaged in a distinctive embossed
bottle with a ring pull crown. In addition to providing a distinct image, an
embossed bottle also reduces the sourcing cost as the company is able to cheaply
source it from glass vendors, in absence of other buyers. Introduction of
proprietary bottles has been completed in half of the market and significant
benefits are visible. The mergers of ABDL, MAPL and Empee into UBL have been
completed, and the schemes of MBIL, UMBL, UB Nizam, UB Ajanta and Chennai
Breweries are progressing as planned.
Outlook: Positive; not rated
We are confident on UBL’s robust volume growth on back of a) increase in
working population (net increase in working age population is expected to be
~270 mln till 2030) b) more liberal views on alcohol of the emerging young
population, and c) increase in number of licensed retail outlets. We do not have a
rating on United Breweries (UBL).
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