Going ahead, healthy growth guidance and an improving outlook for the sector in the second half of FY27 are positives for the company. At the current price, the stock, which has gained 7 per cent over the past week, is trading at just under 50 times its FY28 estimated earnings.
The company posted 6 per cent standalone revenue growth even as volumes fell 3.4 per cent. Revenue growth was driven by a 10.1 per cent year-on-year (Y-o-Y) increase in the P&A segment. While volumes in the segment declined 1.3 per cent, realisations remained healthy, rising 11.6 per cent over the year-ago quarter. The increase was driven by the launch of Smirnoff local flavour variants and broad-based growth across the portfolio. The P&A segment accounts for more than 90 per cent of sales.
JM Financial Research believes visibility on P&A sales growth remains strong, supported by a favourable policy in Karnataka, which accounts for 6-7 per cent of P&A sales, and no further deterioration in Maharashtra. Additional growth drivers include acceleration in white spirits, the scale-up of the bottled-in-origin (BIO) portfolio comprising luxury and premium international spirits following the India-UK free trade agreement (FTA) rollout, and the relaunch of McDowell’s. The popular segment reported a 17.6 per cent Y-o-Y dip in value due to the continued impact of the Maharashtra Made Liquor (MML) policy and recent policy changes in Karnataka, which affected lower-end realisations. The MML policy was introduced to boost local manufacturing, increase state excise revenue and revive idle state distilleries.
Maharashtra also raised excise duty on Indian Made Foreign Liquor, weighing on volumes in the popular and lower P&A segments. In Karnataka, the alcohol-by-volume excise regime hurt the firm’s entry-level portfolio. As a result, the popular segment reported a 14.1 per cent dip in volumes and a 17.6 per cent fall in value during the June quarter.
Despite pressure on volumes, the spirits maker delivered a strong gross margin performance. Gross margins expanded 210 basis points Y-o-Y to 46.1 per cent, driven by a better product mix, pricing and productivity measures. These gains were partly offset by higher costs arising from the West Asia disruption, which pushed up prices of glass, energy, packaging and logistics. Advertising and promotional spending also rose 31 per cent Y-o-Y due to brand innovation and campaigns around the IPL and FIFA tournaments, and operating profit margins contracted 30 basis points to 16 per cent. The firm expects cost pressures to persist in Q2FY27.
While near-term input cost volatility may weigh on margins, Ronak Shah and Mehul Madhwal of Equirus Securities believe structural premiumisation, productivity initiatives and improved Scotch affordability following the India-UK FTA will support medium-term earnings growth. The brokerage has a positive view on the stock with a target price of ₹1,582.
The company believes there are early signs of demand recovery and continues to guide for double-digit growth in the P&A portfolio in FY27. Management expects the second half of 2026-27 (H2FY27) to outperform H1FY27, supported by the normalisation of the Maharashtra base, benefits from Karnataka policy changes, gradual gains from the India-UK FTA and continued momentum in the P&A portfolio.
Most brokerages remain positive on the stock. JM Financial analysts, led by Mehul Desai believe United Spirits will benefit from a favourable operating environment driven by sustained premiumisation, the FTA, possible opening up of the Tamil Nadu market and stable extra neutral alcohol (ENA) prices. The brokerage has an “add” rating with a target price of ₹1,515.
Nirmal Bang Research has revised its FY27 and FY28 net profit estimates upwards by 2.1 per cent and 4.7 per cent, respectively. It remains positive on United Spirits, citing strong premiumisation trends, an improving product mix and healthy medium-term earnings visibility. It has maintained a “buy” rating with a target price of ₹1,676.
Recovery in FY28
 "alcoholic beverages maker, United Spirits")