Strong Growth Outlook for United Spirits

Expects EBIT to Moderate, Stay Ahead of Revenue

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UNITED SPIRITS (UNSP) POSTED Q1FY26 P&A (premium and high-end liquor brands) net sales/volumes growth of 9%/9% y-o-y while, ex-Andhra, P&A net sales/volume rose 3%/1% y-o-y. The gap in performance is due to Andhra being a lower prestige market. Price/mix was flat overall during the quarter though ex-Andhra it was 2.3%. United Spirits's overall EBITDA decreased 9.4% y-o-y—affected by investments behind key trademarks and brands.

Given Maharashtra's recent spirits taxes hike (likely 16%/14% United Spirits's overall/P&A sales), we expect P&A volume to be hurt and possibility of downtrading. Apart from this, glass and freight cost will inch up with planned maintenance in near term. Hence, we are cutting FY26E/27E EPS by 8%/4%, yielding TP of ₹1,710; retain 'BUY'.