United Spirits extends gains on brokerage upgrades

The stock has rallied almost 50% post Diagep deal.

United Spirits has rallied 5% to Rs 2,039, extending its previous day’s 3% rise, after Nomura upgraded the stock to 'BUY' and raised its price target to Rs 2,200.

“The investment bank says that selling off treasury shares and preferential issue of shares to Diageo will bring in Rs 3,300 crore in the company which will help to pay debt and improve profitability,” the Reuters report suggests.

According to analyst at Motilal Oswal Securities, “the deal will bring a plethora of structural improvements. It will help to bring focus back to the core IMFL business, improve operational and financial discipline, and bring more transparency in operations.” The analyst expects gradual margin expansion, improvement in capital efficiency and reduction in leverage cost.

 

The stock opened at Rs 1,945 and hit a record high of Rs 2,084 on the BSE. A combined 5.63 million shares have changed hands on the counter so far on both the exchanges.