United Breweries rallies 7% on strong Q1 results

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United Breweries (UBL) rallied 7% to Rs 1,286 on the BSE in intra-day trade after the company reported healthy 37% year-on-year (YoY) increased in net profit at Rs 2,219 million in June quarter (Q1FY19). Revenue grew 11.2% at Rs 18.66 billion on YoY basis.

The company reported 12% volume growth compared with industry average growth of 9% during the quarter. 
Gross margin expanded by about 180 basis points (bps) driven by favorable state mix, pricing and effective cost management of input material costs.  EBITDA (earnings before interest, tax, depreciation and amortization) margin expanded 249bps YoY to 21.5%.

“UBL realized volume growth in most states except West Bengal and Mumbai. In several states, the Company faced supply constraints, including in Uttar Pradesh and in multiple markets the South given a shortfall in peak season capacity,” the company said in a press release.

Cash flow from operations was strong and combined with better working capital management, resulted in UBL’s net debt levels decreasing significantly, to about Rs 930 million, driving interest costs down by 35%, it added.

At 11:00 am; UBL was trading 5.5% higher at Rs 1,266 on the BSE, as compared to 0.54% decline in the S&P BSE Sensex. The stock trading close to its 52-week high of Rs 1,315 touched on June 19, 2018 in intra-day trade. The trading volumes on the counter more than doubled with a combined 1.41 million equity shares changed hands on the BSE and NSE.

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