Brokerages slash United Spirits' target price, earnings estimates after Q3

United Spirits reported a net profit of ₹418 crore in the third quarter ended December, up from ₹335 crore in the same quarter last year

United Spirits' stock received multiple target price cuts from analysts even as the company reported a 24.8 per cent jump in its December quarter net profit in the current financial year (Q3-FY26). 

 

The Bengaluru-based company reported a consolidated net profit of ₹418 crore in the third quarter ended December, up from ₹335 crore in the same quarter last year.  Revenue rose 7.6 per cent to ₹3,694 crore in Q3 FY26, while its PBIDT (profit before interest, depreciation and tax) was up 1.6 per cent to ₹650 crore.

 

Ebitda (earnings before interest, tax, depreciation and amortisation) margin stood at 16.8 per cent, contracting 35 basis points year-on-year, primarily due to higher advertising and promotion (A&P) expenditure during the quarter.

 

 

United Spirits is undertaking several initiatives, including improved packaging, pocket packs and aggressive pricing, to counter mass-market liquor brands, according to Motilal Oswal. The brokerage said it will closely monitor the mass-market liquor category and developments in the space over the coming quarters. 

 

On margins, Motilal Oswal expects a higher-priced product mix in the 6-8 per cent range to offset the impact of inflationary bulk Scotch prices and elevated advertising spends. The brokerage maintained its 'Neutral' rating on the stock and cut the target price to ₹1,500.

 

The company reported an Ebitda miss for the quarter, although guidance on premiumisation and pricing and availability remains intact, supported by an improving premiumisation trend, according to JM Financial.

 

The brokerage said it has cut its earnings estimates for FY27 and FY28 by around 3 per cent and 4 per cent, respectively, factoring in higher advertising and promotion spends. JM Financial has revised its target price to ₹1,510 from ₹1,585 earlier. 

 

Following revisions in the goods and services tax (GST) rates and the recent increase in excise duty on tobacco, states may announce further tax revisions in their upcoming budgets, Emkay Global said.

 

The brokerage said the proposed UK free trade agreement is positive for growth and margins, although concerns remain around states absorbing part of the benefits. Emkay Global expects operating performance to improve in the fourth quarter, led by better sales and margin traction.  ALSO READ | Q3 Results Today

United Spirits share price history

The alcoholic beverages company's stock rose as much as 1.3 per cent during the day to ₹1,337.7 per share. The stock pared gains to trade 1.1 per cent higher at ₹1,336 apiece, compared to a 0.33 per cent advance in Nifty 50 as of 12:24 PM. 

 

The counter has fallen 7.4 per cent this year, compared to a 3 per cent decline in the benchmark Nifty 50. United Spirits has a total market capitalisation of ₹22,247.43 crore. 

 

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