United Breweries hits record high; up 12% in one week

The stock hit a record high of Rs 1,464, outperforming the market by gaining 12% during the current week, as compared to a 1.2% decline in the S&P BSE Sensex.

Shares of United Breweries (UBL) hit a record high of Rs 1,464, up 3% on the BSE in early morning trade in an otherwise subdued market.

The stock has outperformed the market by gaining 12% during the current week, as compared to a 1.2% decline in the S&P BSE Sensex. Since July 30 (Q1FY19), post-June quarter results, UBL have rallied 30% against 3% fall in the benchmark index.

The company had reported 12% volume growth compared with industry average growth of 9% during the quarter. EBITDA (earnings before interest, tax, depreciation and amortization) margin expanded 249bps YoY to 21.5%.

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%, the company said in a press release.

With volume growth recovering in key profitable markets of Karnataka and Maharashtra, we expect realizations to improve, which can drive further upside to margins, analysts at Emkay Global Financial Services said in result update.

The theme around favourable demographics, rising disposable income and low per capita beer consumption continues to attract global beer companies in India. From the regulatory perspective, the worst appears to be over with fading of highway ban and stable state excise policies, which would create a favourable consumer pricing scenario and assist overall volume growth, the brokerage firm ICICI Securities said in result update. The stock, however, achieved the brokerages 12 target price in the range of Rs 1,410 – Rs 1,450 per share.

At 11:11 am; UBL was trading 1.7% higher at Rs 1,442 on BSE, against 0.23% rise in the S&P BSE Sensex. A combined 568,848 equity shares changed hands on the counter on the NSE and BSE so far.