United Spirits Q4 Review - Resilient Off-Trade, Margin Performance: ICICI Securities

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ICICI Securities Report

Strong Prestige and above segment and a resilient off-trade channel aided volume print of up 8% of United Spirits Ltd. in Q4 FY21.

Restrictions in on-trade and issues in West Bengal and Andhra Pradesh continued to impact.

Favourable gross margins, costs controls and operating leverage helped deliver a superior margin performance (Ebitda margin up 490 basis points YoY to 18.5%).

Improved cash generation aided net debt reduction to Rs 5 billion.

Operating cash flow/free cash flow generation in FY21 was Rs 17.3 billion / Rs 16.2 billion (highest in many years).

New distribution model (online ordering and home delivery), if sustained, can be a structural positive for the industry.

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