United Spirits surges 8% on strong September quarter results

Shares of India's largest alcoholic beverage company United Spirits (USL) has surged 8% to Rs 620, extending its past three days 11% gain on the BSE, after the company posted a strong 69%  jumped in net profit at Rs 2.59 billion September quarter (Q2FY19). It had posted a net profit of Rs 1.53 billion in Q2FY18.

The healthy net profit growth during the quarter under review was on the back of robust sales of its premium brands. Diageo Plc-owned USL’s standalone operational revenue grew 14.7% to Rs 71.28 billion from the same quarter a year ago.

“Reported net sales increased 14% delivered through the continued strong performance of the Prestige and other segment, an improved performance in the popular segment as well as benefitting from lapping the impact of the highway ban in the same period last year,” United Spirits said.

Ebitda (earnings before interest, tax, depreciation and amortization) margin improved 313 bps at 19.4% during the quarter. Interest costs were at Rs 420 million, 37% lower than prior year, driven by lower debt, improved debt-mix and lower interest rates.

“On the profitability front, the company has delivered robust gross margin improvement both in the quarter as well as the first half, driven mainly by savings from our productivity programme which more than offset the adverse impact of inflation. The company’s medium-term ambition is to grow top line by double digits consistently and improve EBITDA margin to mid-high teens." Said Anand Kripalu, CEO, United Spirits.

The stock has outperformed the market by surging 34% from its recent low of Rs 463 on October 9, 2018, as compared to a marginal 0.4% rise in the S&P BSE Sensex. It touched a 52-week low of Rs 439 on the BSE on same date.

At 11:23 am, United Spirits was trading 5% higher at Rs 605, against 0.09% decline in the benchmark index. The trading volumes on the counter more than doubled with a combined 2.78 million equity shares changed hands on the BSE and NSE so far.

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