United Spirits extends gain on good Q3 earnings

The stock rallied nearly 6% to Rs 2,194 in intra-day trade, extending its previous week's 9% gain

United Spirits rallied nearly 6% to Rs 2,194 in intra-day trade, extending its previous week’s 9% gain on the BSE, after reported more than doubled standalone net profit at Rs 148 crore for the third quarter ended December 31, 2016 (Q3FY17). A Diageo Group company had a profit of Rs 37 crore in year ago quarter.

Total income from operations grew 6% at Rs 7,082 crore against Rs 6,671 crore in the corresponding quarter of previous fiscal. Net sales growth of 3% in the third quarter slowed down due to de-monetization, United Spirits said in a press release.
 

Popular segment net sales declined 6% in the third quarter and declined 5% in the nine months impacted by the Bihar prohibition. Priority states grew volumes and net sales in the segment, it added.

EBITDA (earnings before interest, tax, depreciation and amortization) margin in third quarter was at 11.8%, up 74 basis points driven by gross margin improvement and lower staff costs.

“Continued focus on premiumisation, price increases in select states and productivity initiatives helped us to offset inflation and led to 152bps improvement in gross margin. We have delivered underlying EBITDA margin of 11.6% excluding one off impact which is in line with our expectation,” said Anand Kripalu, CEO, United Spirits.

Although we expect the impact of de-monetization to abate as we move into the next quarter, the recent Supreme Court judgement on liquor outlets near highways remains a risk and adds some uncertainty for the future periods, he adds.

At 12:22 pm; the stock was up 4% to Rs 2,155 on the BSE as compared to 0.17% rise in the S&P BSE Sensex. A combined 1.25 million shares changed hands on the counter on the BSE and NSE so far.