A prominent liquor producer known for its extensive spirits portfolio faces analyst concerns. This article covers a major financial institution’s shift to a cautious stance on the company, citing specific challenges. The firm has downgraded its rating and predicts a significant potential decline of approximately 20% in the company’s share price ahead.
United Spirits Limited’s stock, with a market capitalisation of Rs. 1,08,593 crores, rose to Rs. 1,514, hitting a low of up to 0.8 percent from its previous closing price of Rs. 1,503.80. However, the stock over the past year has given a return of 15.6 percent.
Target By Macquarie
Macquarie has turned cautious on United Spirits, assigning an “Underperform” rating with a revised target price of Rs. 1,250, implying a potential downside of 20%. The brokerage anticipates a 5% sales decline, driven by a steep 30% drop in volumes particularly impactful given that Maharashtra alone contributes 15% of total sales. While a consumer price hike of over 15% is expected to offset cost pressures, Macquarie warns that this could lead to reduced consumption or a shift to cheaper alternatives, pressuring overall demand.
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Government excise duties
The Maharashtra cabinet, led by Deputy CM Devendra Fadnavis, has approved a sharp hike in liquor excise duties and licensing fees to boost annual revenue by Rs 14,000 crore. The duty on Indian-made foreign liquor (IMFL) has increased from 3x to 4.5x the manufacturing value, while country liquor now faces higher levies. Liquor firms have already raised prices, with a 180ml IMFL bottle now starting at Rs 205 (up from Rs 110–115), and country liquor rising to Rs 80 from Rs 70.
A new “Maharashtra-made liquor” category has been introduced, priced at Rs 148 for 180ml. Licensing fees for retailers and restaurants are also up 10–15%. These hikes are expected to hurt demand and margins in the alcohol industry, forcing consumers to either trade down to cheaper options or reduce consumption altogether.
Q4 Financial highlight
In Q4FY25, the company reported revenue of Rs. 3,031 crore, up 9% YoY from Rs. 2,783 crore, but down 12% QoQ from Rs. 3,433 crore. Over the past three years, sales have grown at a CAGR of 8%, indicating a steady long-term growth trajectory despite quarterly fluctuations.
Net profit for Q4FY25 stood at Rs. 421 crore, marking a strong 75% YoY jump from Rs. 241 crore and a 26% rise QoQ from Rs. 335 crore. The company has delivered a 3-year profit CAGR of 21%, supported by consistent operational performance, with ROE also growing at 20% CAGR over the same period.
Written By Fazal Ul Vahab C H
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