RCB sale likely to fetch rich dividends for United Spirits shareholders

Nomura says United Spirits' plan for the IPL team could unlock a one-time payout for shareholders

United Spirits’ (USL) planned sale of its Royal Challengers Bengaluru (RCB) franchise could pave the way for a sizeable one-time payout to shareholders, with Nomura estimating a potential special dividend of up to Rs 196 per share.

 

The dividend expectation stems from USL’s agreement to divest its entire stake in Royal Challengers Sports (RCSPL) at an enterprise valuation of Rs 16,660 crore ($1.78 billion) — the highest ever for an Indian Premier League (IPL) franchise.

 

Nomura said the eventual payout will depend on how much of the proceeds the company chooses to distribute. In case of a full payout, the dividend per share works out to Rs 196. If the company decides to retain half of the proceeds, the dividend per share could be about Rs 98 per share.

 

 

The brokerage noted that USL was already in a net cash position prior to the transaction, strengthening the case for a shareholder return. However, the company has not yet outlined a formal capital allocation plan.

 

The buyer consortium includes the Aditya Birla Group, The Times Group, Bolt Ventures, and Blackstone.

 

Nomura said the realised valuation exceeded its own estimate and Bloomberg consensus, though it falls slightly short of more optimistic market expectations of around $2 billion.

 

The brokerage characterised the transaction as a strong monetisation of a non-core asset. RCB’s financial contribution to USL has been relatively limited — accounting for about 2 per cent of revenue and 9 per cent of ebitda and profit in FY25.

 

Still, the franchise has remained a high-visibility asset.

 

Nomura has a “buy” rating on USL at a target price of Rs 1,650, citing multiple tailwinds for its core alcohol-beverage business, including regulatory easing across states, pricing deregulation in key markets, and potential benefits from the India-UK free trade agreement.

 

Shares of USL last closed at Rs 1,311 on Wednesday, valuing the company at Rs 95,356 crore.