Dolat Capital Market has given Buy recommendation for United Breweries with a target price of Rs. 1504 in its research report issued on Apr 28, 2021

Dolat Capital Market’s research report on United Breweries

UBL’s Q4FY21 operating revenue performance was in-line. Sharp decline in other opex (-12% YoY in Q4FY21, -12% YoY in Q4FY20) was key positive surprise. Opex reduction was despite 9% YoY volume growth. Sustainability of costs reduction is the key. UBL’s market leadership, product portfolio, brand positioning, premiumisation, costs/capex consciousness and superior execution makes it an attractive long-term play. But, barley price inflation (~15% YoY) and second wave of covid-19 in key beer season are near-term dampener. However, UBL is well-poised for growth and thus a post-covid recovery play led by (1) favorable base (2) costs rationalization and (3) reduction in excise duties in key states (WB, UP, and Rajasthan).


We reduce our FY22 estimates to factor the impact of covid in H1FY22. We broadly maintain our FY23 estimates. Post the ~10% correction in stock price we upgrade UBL to BUY from Accumulate with revised TP of Rs 1,504 @ 50x Mar-23E EPS net of Rs 20 for CCI liability (earlier Rs 1,476 @ 50x Dec-22E EPS). UBL has traded at ~60x 1-yr forward PE in trailing four years vs. 59/39x FY22/23E EPS.