United Spirits slips 7% as net sales, profit fall in December quarter

The company said it is not providing quantitative guidance for fiscal 2021 as in the near-term there are still reasons to remain cautious

Shares of United Spirits slipped 7 per cent to Rs 597 on the BSE in Thursday's intra-day trade following its December quarter numbers announcement. Despite a rebound in performance, the management remains cautiously optimistic due to continued uncertainty in the medium term. In the past one month, the stock has outperformed the market by surging 14 per cent as against a 1 per cent gain in the S&P BSE Sensex till Wednesday.

“Despite a quicker rebound than originally expected, in the near-term, there are still reasons to remain cautious and consequently, the company is not providing quantitative guidance for fiscal 2021. Our business continues to exhibit strong fundamentals and our focus to “Emerge stronger” will hold us in good stead,” Anand Kripalu, CEO, commenting on the financial results said.

United Spirits said, in the October-December quarter (Q3FY21), the company’s reported net sales declined 3.6 per cent, a sequential improvement from Q2 driven by continued off-trade resilience, gradual on-trade recovery offset by the contraction of owned and franchise business in Andhra Pradesh (AP). Reported Ebitda (earnings before interest, taxes, depreciation, and amortisation) margin was 15.4 per cent, down 100 basis points (bps), primarily driven by lower fixed cost absorption and increase in administrative expenses. Profit after tax (PAT) declined 11 per cent year-on-year (YoY) to Rs 230 crore during the quarter.

Prestige & Above segment net sales declined 0.8 per cent partially as a result of lapping a high festive season comparative. The Popular segment net sales declined 6.7 per cent, led by a decline of 5.7 per cent in priority states. Increased consumer prices impacted demand in this price-conscious segment and unfavourable state mix further contributed to the decline, it said.

“The results were in-line with I-Direct estimates on the topline front and above estimates on the profitability front. Prestige & Above segment reported flat volumes YoY (grew 6 per cent QoQ) at 11.4 million cases, in spite of a strong festive base. Popular segment too reported largely flat volumes at 9.9 million cases,” ICICI Securities said in a note.

At 10:18 am, United Spirits was trading 6 per cent lower at Rs 607 on the BSE as against a 0.62 per cent decline in the S&P BSE Sensex. The trading volumes on the counter more than doubled with a combined 3.3 million equity shares having changed hands on the NSE and BSE so far.