- 18 May 2023
- ICICI Securities
United Spirits Q4 Results 2023: Gross margins improve QoQ, higher advertisement impacts margins
United Spirits Ltd | CMP: 1275 | Market Cap: 92,733.62
Gross margins improve QoQ, higher advertisement impacts margins
United Spirits reported mixed set of numbers. While the topline was above I-direct estimates, the numbers were significantly weaker on the profitability front, aided by higher advertisement and other expenses. The company also reported an exceptional loss of Rs18 crore led by supply chain restructuring and loss on sale of subsidiary (Sovereign distillery sold for Rs32 crore)
Q4FY23 Earnings Summary (consolidated)
Views: Higher P&A volumes were led by continued momentum in the off-trade and on-trade along with normalisation of BIO Supplies. Advertisement expense during the quarter shot up to 13.8% reflecting significant investment towards premium portfolio. Continued inflationary impact on COGS is still evident in the quarter, which we expect would countered in the coming quarters via continued favourable product mix, removal of monocartons in certain lower end brands and price hikes in key states.
Impact: Neutral