United Spirits plunges 6% on 3.6% decline in net sales; PAT drops 11% yoy

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United Spirits Limited reported net sales declined 3.6% to Rs2489cr but showed a sequential improvement from Q2 (Rs2146cr) driven by continued off-trade resilience, gradual on-trade recovery offset by the contraction of owned and franchise business in Andhra Pradesh (AP).

The company’s net profit for the quarter fell 11.16% on year at Rs230cr but PAT margin was 9.2%. Gross margin was 44.6%, up 24bps versus last year, driven by benign commodities and continued focus on productivity during the quarter.

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The company’s reported EBITDA was Rs384cr, down 9.5%. Reported EBITDA margin was 15.4%, down 100bps, primarily driven by lower fixed cost absorption and increase in administrative expenses. Interest costs were Rs38cr, down 17% driven by reduced debts and lower interest rates.

The company stock was bearish, tracking overall market trend on Thursday. At around 9.31 am, United Spirits Ltd stock was trading at Rs605.00 down Rs 39.75 or 6.17% on the BSE.

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“Prestige & Above segment net sales declined 0.8% partially as a result of lapping a high festive season comparative. Popular segment net sales declined 6.7%, led by a decline of 5.7% in priority states. Increased consumer prices impacted demand in this price conscious segment and unfavourable State mix further contributed to the decline,” company said in a regulatory filing on Wednesday.

For the nine months of the current fiscal year, the company reported net sales at Rs5,665cr, declined 20%; with improvement seen sequentially in third quarter vs prior two quarters.

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“Prestige & Above segment net sales declined 15.7%. Popular segment net sales declined 22.4% and priority states were down by 19.7%,” company said.

Profit after tax was Rs143cr 79% decline compared to Rs681cr in 9MFY20 and PAT margin was 2.5%. Gross margin was 43.1%, down 235bps versus last year, primarily due to due to contraction of owned and franchise business in AP and resulted impact on South franchise business, lower fixed cost absorption and obsolete inventory provisions.

Reported EBITDA was Rs576cr, down 53.4%; reported EBITDA margin was 10.2%, down 723bps due to negative impact of fixed cost de-leverage. After adjusting for the one-off impact of bulk Scotch sale and restructuring costs, underlying EBITDA declined 50%.

Interest costs were Rs138cr, 3.1% lower than last year, mainly due to lower debt and lower interest rates.



( With inputs from indiainfoline)

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