United Breweries expands production, stock down 20% from peak; time to buy?

United Breweries has commenced production of its flagship brand Kingfisher at the recently leased Ilios Brewery in East Godavari, Andhra Pradesh

Analysts at Nuvama Institutional Equities expect the stock of United Breweries (UBL) to hit a record high of ₹2,400 per share as the company's capacity expansion and localisation are set to drive growth.

 

The brokerage maintained a 'Buy' rating on the stock and a target price of ₹2,400 implies an upside of nearly 31 per cent. The shares of the brewery company are down 20 per cent from its peak of ₹2,299.7, which it hit on February 3 this year. 

 

In a recent update, the company informed that the firm has commenced production of its flagship brand Kingfisher at the recently leased Ilios Brewery in East Godavari, Andhra Pradesh. "This marks a significant milestone as UBL strengthens its manufacturing footprint in Andhra Pradesh," UBL said in the statement. 

 

Ilios Brewery has a monthly capacity of up to 4.5 lakh cases of beer, complementing the 12 lakh case capacity of the Srikakulam brewery to meet the region’s growing demand for high-quality beer, it further said. " By localising production, strengthening our supply chain and creating long-term value for the local ecosystem, we are well positioned to meet rising consumer demand," Vivek Gupta, managing director and chief executive director of United Breweries, said.  

 

Nuvama, in a note on September 2, said that production commencement at the Andhra Pradesh plant is a "milestone". The brokerage believes that localisation can potentially improve margins and prevent stock-outs in the peak season, particularly in the first quarter. This will also potentially improve margins by avoiding interstate taxes, it said. 

 

To address the can shortage issue, the company is adding a new canning line at its Nizam Brewery in Telangana to produce premium Kingfisher and Heineken variants, Nuvama noted. Supply constraints have led to a 1-2 per cent drag on volume growth over the past six months, which can be addressed with this development, it said. 

 

Margin pressure persists from brand investments, interstate sales and an unfavourable state mix (driven by Karnataka), it said. "However, with localisation and UBL's target to improve bottle return rates to 73 per cent, margins should gradually improve."

 

The brokerage expects the second-quarter demand to be weak, given the above-average rains and high base in the second quarter.  

United Breweries Q1 results

The company reported a 5.9 per cent increase in consolidated net profit for the quarter ended June 2025. The profit stood at ₹184.03 crore, up from ₹173.80 crore during the same period last year. 

 

However, the revenue from operations fell 7.4 per cent year-on-year to ₹5,380.78 crore. In the April-June quarter of 2024, revenue was ₹5,811.28 crore. Total expenses for the quarter declined 7.9 per cent to ₹5,143.97 crore. Overall income also dipped by 7.33 per cent to ₹5,391.85 crore.

 

UBL reported a strong growth in the premium segment, which grew by 46 per cent, outpacing the overall category growth.

UBL Share price history

Shares of United Breweries (UBL) are down 20 per cent from their peak and closed 0.6 per cent lower on Wednesday at ₹1,829.2 per share. The counter has fallen 10.2 per cent this year, compared to a 4.5 per cent advance in the benchmark Nifty 50. UBL has a total market capitalisation of ₹48,396.72 crore.