Motilal Oswal is bullish on United Breweries has recommended Buy rating on the stock with a target price of Rs 1730 in its research report dated September 04, 2018.
Motilal Oswal's research report on United Breweries
The beer industry is expected to grow by 7.6% CAGR in terms of volume over FY18-24, according to CISION. UBL expects to beat industry growth over this period. Management places growth at a premium. The premium segment grew at a rapid pace for UBL in FY18-with Heineken growing 30%, Kingfisher Ultra growing by 59%, and Kingfisher Ultra Max growing by 80% YoY. With a slew of other brand launches at various levels in the premium segment over the past 16 months, UBL is poised for healthy profitability growth. Kingfisher Storm already has a 3-5% market share within a year of its launch in four states. The company is likely to enter into the non-alcoholic beer segment in 3QFY19 and introduce its craft beer offering in 4QFY19.
Outlook
We maintain Buy rating with a revised target price of INR1,730, implying a 32% upside to CMP.
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