united spirits: Analysts raise targets on USL post Q4 show

Mumbai: Brokerages have raised the target price on (USL) after the company last week reported a six-fold increase in March quarter net profit from a year earlier.

The company controlled by UKbased spirits and beer maker Diageo posted a net profit of ?167.3 crore for the quarter and net sales rose 11.6% from a year earlier to Rs 2,224 crore. Shares of United Spirits ended up 2.7% at Rs 588.20 on Tuesday.

However, there is no consensus over ratings. Ambit maintained sell rating post results and Elara upgraded it to reduce from sell. Edelweiss maintained hold but Motilal Oswal, Anand Rathi and Emkay retained buy ratings. HDFC Securities maintained add.

Emkay said that ongoing lockdowns could impact the company in the ongoing financial year but overall performance offers comfort on growth and valuation at 35 times FY23 estimated earnings per share is relatively attractive.

Elara Securities said United Spirits’ profitability may face headwinds such as cost inflation in key raw materials — glass and extra neutral alcohol.

Ambit has retained a sell rating on concern over market share loss even as the company has strengthened its balance sheet with a debt reduction of ?1,490 crore. It has increased the target price on the stock to Rs 565 from Rs 556.