United Spirits Q1 profit jumps 52% on premium portfolio growth despite margin pressure
ADVERTISEMENT
United Spirits Ltd., India's largest liquor maker by sales, reported a 51.6% year-on-year jump in standalone net profit for the June quarter, driven by continued premiumisation, improved gross margins and robust growth in its Prestige & Above portfolio.
The Diageo India-owned company posted a standalone net profit of ₹391 crore for the quarter ended June 30, compared with ₹258 crore a year earlier. Net sales rose 6% to ₹2,703 crore, while EBITDA increased 4.1% to ₹432 crore. EBITDA margin stood at 16%, compared with 16.3% in the year-ago period.
"We have commenced fiscal 2027 on a strong note with double-digit growth in the Prestige & Above segment. Our consumer centric interventions give us confidence to increase growth further as the year progresses. We continue to future-proof our portfolio while creating enduring value for all our stakeholders," managing director and CEO Praveen Someshwar said.
Premium brands offset weakness in popular segment
The company's Prestige & Above portfolio, which accounted for 91.7% of net sales during the quarter, posted a 10.1% increase in net sales value to ₹2,478 crore, supported by innovation in Smirnoff's local flavour range and broad-based growth across the portfolio. However, the company said the performance was partly offset by the continuing impact of adverse liquor policy changes in Maharashtra.
The Popular segment remained under pressure, with net sales declining 17.5% year-on-year to ₹206 crore. The company attributed the weakness to the Maharashtra policy impact as well as recent excise slab changes in Karnataka that adversely affected realisations. Overall sales volume declined 3.4% to 14.47 million cases, although favourable price and product mix helped drive revenue growth.
Higher marketing spends cap margin expansion
Gross profit rose 11.2%, with gross margin expanding 212 basis points to 46.1%, supported by revenue growth management initiatives, an improved product mix and productivity gains. The company said these benefits were partly offset by higher input and freight costs arising from the West Asia crisis.
Marketing expenditure increased to 11.5% of net sales from 9.3% a year earlier as the company continued to invest behind its brands. While EBITDA grew during the quarter, the higher advertising and promotion spends, along with elevated overheads, led to a 30-basis-point contraction in EBITDA margin to 16%.
Other income surged to ₹222 crore from ₹61 crore a year earlier, primarily due to a ₹150-crore dividend received from Royal Challengers Sports Pvt. Ltd. The company also recognised ₹81 crore of exceptional charges during the quarter, mainly relating to employee severance and its supply agility programme.
Shares of United Spirits closed 1.14% higher at ₹1,406.60 apiece on the NSE on Wednesday. The stock has gained nearly 5% over the past year, broadly tracking the Nifty Next 50 index, which has risen almost 6% during the same period.