United Spirits shares rise on buzz of Diageo stake sale in RCB franchise

United Spirits' parent, Diageo, has been holding discussions as it weighs possibilities, including a sale of part or all of the IPL franchise RCB

Shares of United Spirits rose 3 per cent on Tuesday on reports that its parent, Diageo Plc, is in talks to sell a stake in Indian Premier League cricket franchise Royal Challengers Bengaluru (RCB). 

 

The breweries and distilleries firm's stock rose as much as 3.28 per cent during the day to ₹1,645 per share, the highest level since January 8 this year. The stock pared gains to trade 1.7 per cent higher at ₹1,620 apiece, compared to a 0.14 per cent advance in Nifty 50 as of 10:30 AM. 

 

Shares of the company snapped a two-day decline and have recovered over 7 per cent from their recent lows of ₹1,506, which it hit last month. The counter has fallen 0.02  per cent this year, compared to a 6.3 per cent advance in the benchmark Nifty 50. United Spirits has a total market capitalisation of ₹1.18 trillion, according to BSE data.   Track LIVE Stock Market Updaters Here

 

Diageo mulls stake sale in RCB

The British distiller, Diageo, has been holding discussions as it weighs possibilities, including a sale of part or all of the IPL franchise RCB, according to a report by Bloomberg. The company may seek a valuation of as much as $2 billion, the report said, quoting people familiar with the matter. 

 

However, no decision is final, and they may decide against selling the franchise, the report added. The company is weighing a stake sale after the health ministry has been pushing to ban promotion of tobacco and alcohol brands in the IPL, and stop indirect promotion of other unhealthy goods by sports personalities.

 

RCB was initially owned by Vijay Mallya's Kingfisher Airlines, which was shut down due to debt concerns. Diageo eventually took over RCB after buying Mallya’s spirits business. 

RCB recently won its first IPL title, a major milestone that has boosted its visibility and commercial appeal. With Virat Kohli - one of the most followed athletes globally - in its ranks, RCB commands enormous market appeal, particularly across digital platforms. 

India-UK FTA seen neutral for United Spirits: Elara Capital

The India-UK free trade agreement (FTA), which gradually reduces Scotch whisky import duty from 150 per cent to 40 per cent over 10 years, is expected to narrow the price gap between domestic and duty-free Scotch. 

 

Elara Capital said this could lead to an 8–20 per cent price drop, boosting United Spirits’ bottled-in-origin (BIO) Scotch volume CAGR to 33 per cent till FY28, from 20–22 per cent earlier. However, with Ebitda margins for Scotch capped at ~10 per cent, higher volumes may dilute profitability by 20–40 basis points. Overall, the impact is seen as neutral.

 

About United Spirits

United Spirits is India's largest alcoholic beverage company. The company manufactures, sells, and distributes beverage alcohol, including whisky, brandy, rum, vodka, and gin. USL's portfolio comprises over 80 brands, including McDowell's, Johnnie Walker, and Royal Challenge. The company operates in two segments: India and outside India. USL also imports and sells iconic Diageo brands in India.