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UBS Investment Research
United Spirits Ltd
Consolidated disclosures for Q1 FY11
„ Consolidated revenues +39.5% YoY
United Spirits (USL) grew consolidated revenues 39.5% YoY due to the
consolidation of Balaji Distilleries (lower margin conversion business). GMs
declined 470 bps. Ad/sales decreased to 9.1% of sales from 9.9% in Q1 FY11,
aided by an increase in spend on Whyte & Mackay (W&M) business building.
EBITDA growth was +16% YoY and PAT growth +6% YoY for the consolidated
business in Q1 FY11.
„ W&M impacted by higher COGS and A&P spend
W&M revenues grew 38% YoY in Q1 FY12 and COGS grew +64% YoY as the
historical cost of aged scotch was proportionately higher than average. EBITDA
margins declined from 21% to 11% YoY due to a 55% YoY increase in A&P
spend (up ~200bps YoY). USL management has maintained its W&M EBITDA
guidance of £33m for FY12E.
„ Debt should come off in September 2011 quarter
The FY11 consolidated financials released reveal a Rs3.4bn loan to United
Breweries Holding Ltd, which has been repaid in July 2011. We expect the debt
level and the interest cost on the same to decline proportionately in September
2011.
„ Valuation: maintain Buy with a price target of Rs1,250
We derive our price target from a DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool. We assume a WACC of
10.4%. At our price target, USL would trade at 29x FY12E and 24x FY13E PE.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
United Spirits Ltd
Consolidated disclosures for Q1 FY11
„ Consolidated revenues +39.5% YoY
United Spirits (USL) grew consolidated revenues 39.5% YoY due to the
consolidation of Balaji Distilleries (lower margin conversion business). GMs
declined 470 bps. Ad/sales decreased to 9.1% of sales from 9.9% in Q1 FY11,
aided by an increase in spend on Whyte & Mackay (W&M) business building.
EBITDA growth was +16% YoY and PAT growth +6% YoY for the consolidated
business in Q1 FY11.
„ W&M impacted by higher COGS and A&P spend
W&M revenues grew 38% YoY in Q1 FY12 and COGS grew +64% YoY as the
historical cost of aged scotch was proportionately higher than average. EBITDA
margins declined from 21% to 11% YoY due to a 55% YoY increase in A&P
spend (up ~200bps YoY). USL management has maintained its W&M EBITDA
guidance of £33m for FY12E.
„ Debt should come off in September 2011 quarter
The FY11 consolidated financials released reveal a Rs3.4bn loan to United
Breweries Holding Ltd, which has been repaid in July 2011. We expect the debt
level and the interest cost on the same to decline proportionately in September
2011.
„ Valuation: maintain Buy with a price target of Rs1,250
We derive our price target from a DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool. We assume a WACC of
10.4%. At our price target, USL would trade at 29x FY12E and 24x FY13E PE.
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