Investment Idea United Spirits Apr 01, 2019 Foods · The Indian alcobev industry is segmented into...

1 | P a g e

United Spirits

Foods

Investment Idea

Apr 01, 2019

Buying Range

Rs 513 - 549

Target

Rs. 619

Time Horizon

4 Quarters

Industry

Consumer (Distilleries)

CMP

Rs. 549

Company Background

United Spirits Limited (USL) is the largest alcoholic beverage company and among the largest consumer goods companies in India. USL is the second largest spirits company in the world by volume and is a subsidiary of Diageo PLC. USL is involved in the manufacture, sale and distribution of beverage alcohol. It has a comprehensive brand portfolio with over 100 brands of Scotch whisky, IMFL whisky, brandy, rum, vodka, gin and wine. They operate in two geographic segments: India and outside India. USL sells over 1 million cases annually covering 15 brands. It has brands spanning across price points operating in all segments of Popular, Prestige, Premium and Luxury. USL produces and sells around 78 million cases. The company's products include whisky, brandy and rum. Their brands include Dalmore – Single Malt Whisky, Jura, Whyte and Mackay, Black Dog, Signature, Romanov, Antiquity, Royal Challenge, White Mischief, Bouvet Ladubay, Four Seasons, McDowell’s No.1, Director’s Special Black, McDowell’s VSOP, Bagpiper, Old Tavern and Haywards are some of the marquee brands owned by the Company. In addition, USL also imports, manufactures, distributes and sells various iconic Diageo brands such as Haig Gold Label, Captain Morgan, Johnnie Walker, J&B, Baileys, Lagavulin, Talisker, VAT 69, Black & White, Smirnoff and Ciroc in India under different licensing agreements. USL has 15 brands in its portfolio which sell more than a million cases every year, of which 2 brands sell more than 10 million cases annually.

Investment Rationale

United Spirits (USL) has witnessed a remarkable turnaround in its performance since its acquisition by Diageo, a global leader in alcohol beverage, almost five years ago. The company’s strong focus on premium segments has yielded sweet fruits for the company. This segment now contributing nearly 66% to its total sales, up from ~50% around the time of its acquisition. Manufacturing productivity and deleveraging have been other areas where too significant gains have been made, supporting expansion of margins by more than 500bps. We expect further improvement in margins and expect the company to report operating margin in high teens. We recommend buy on the stock at cmp of Rs 549 and add on dips to Rs 513 with TP of Rs 619 over the 4 quarters. Our target price is based on a P/E multiple of ~40x FY21E earnings and ~25x EV/EBITDA.

For 9M FY19, revenues have grown 12.4% to Rs 6741cr. P&A segment revenue increased 18% yoy and popular segment was flat.

EBITDA margin surged 330bps led by cost control measures across all the expenses. Robust operational performance coupled

with strong revenues and also lower finance costs helped company to post 58% increase in PAT to Rs 532cr.

Research Analyst

Kushal Rughani

[email protected]

HDFC Scrip Code MCDLTD

BSE Code 532432

NSE Code MCDOWELL

Bloomberg UNSP: IN

CMP as on 01 Apr’19 549

Equity Capital (Rs cr) 145.3

Face Value (Rs) 2

Equity O/S (cr) 72.7

Market Cap (Rs Cr) 39878

Book Value (Rs) 44

Avg. 52 Week Vol 1125321

52 Week High (Rs) 731

52 Week Low (Rs) 439

Risk Rating Red

Red Flag Level 465

Shareholding Pattern (%)

Promoters 56.8

Institutions 32.5

Non Institutions 10.7

mailto:[email protected]

2 | P a g e

United Spirits

Foods

Investment Idea

Apr 01, 2019

USL is witnessing growth in each upward segment at a rate higher than the segment below it viz. increased premiumisation. This is strategically positive.

Limited impact of excise increase in Maharashtra viz. nil on Popular and lower end P&A where company is the leader, moderate increase in mid and high

end P&A. ENA price increase would take place in 4QFY19. However it expects to mitigate the pressure on GM through costs control on other opex.

For FY18, company had posted 5% revenue dip to Rs 8170cr, however operating margin witnessed 70bps expansion to 12.5% led by higher revenues from Prestige & Above (P&A) segment. The Popular segment represented 53% of total volumes and 37% of total net sales during the financial year 2018, as against 59% and 42% volume and value contribution respectively, in the previous financial year. The Prestige and Above (P&A) segment represented 63% of total net sales and 47% of total sale volume during the current year. Strong operating margin coupled with lower finance costs resulted into 25% PAT growth to Rs 549cr.

About Liquor Industry

The Indian alcobev industry is segmented into IMFL (Indian Made Foreign Liquor), IMIL (Indian Made Indian Liquor), Wine, Beer and imported alcohol. IMFL

category accounts for almost 70% of the market. Andhra Pradesh, Telangana, Kerala, Karnataka, Sikkim, Haryana and Himachal Pradesh are amongst the

largest alcohol consuming states in India. The most popular channel for sale of alcobev products is through stores. As per the World Health Organization,

close to 30% Indians consume alcohol, out of which 4-13% are daily consumers. The minimum drinking age varies from 18 to 25 years across states in India,

taking the total count of legal drinking age population to approximately 650 million as in 2018.

While alcohol beverages in India are a core consumer product, it is not a consumer business. Each element of the business – manufacturing, wholesale

distribution, retail distribution, pricing, packaging, sales targets and even individual consumption – is regulated and controlled separately by each of India’s

29 states for their respective jurisdictions. With the current taxation powers for alcohol and the state’s need for higher revenues, state governments are

becoming laser focused on revenue maximization. However India’s PPP price of alcohol is already amongst the highest in the world and the per capita

consumption volumes amongst the lowest. This means, the only way to maximize revenues for the state governments is by increasing the volumes pointing

to a very conducive environment for the industry.

Changing Consumer Trends

Rapid urbanisation is also leading to spur in aspirational values of people, leading to higher consumption of premium alcobev brands. With more Indians

travelling abroad, rising aspirations, favourable environment for imported liquor and higher disposable income, consumers are upgrading towards Premium

segments in the country. The rise in premiumisation is clearly reflective in the increased focus of the big players on semi-premium and Premium categories

with an increase in launches and increased marketing of these categories. Another trend which is gaining traction in the alcobev space is the growing

popularity of grain-based liquor as against traditionally popular molasses based liquor. As per industry estimates, the Premium and above (P&A) segment

is expected to post 14% CAGR over 2016-2021 than the overall industry growth.

3 | P a g e

United Spirits

Foods

Investment Idea

Apr 01, 2019

Favourable Demographics

India’s demographics are really favourable for the alcobev business. Still, the per capita consumption of alcohol in the country stands at 4.6 litres, just a

shade above Sri Lanka (4.5 litres), while Philippines is 1.2x India (5.6 litres), China 1.7x (7.6 litres), Thailand 1.8x (8.3 litres), the US 2.0x (9.0 litres) and the EU

2.3x (10.6 litres). Every year approximately 2.5 crore people enter the legal drinking age in India and will do so at least for the next 10 years. The revival in

GDP will give a further fillip to alcobev sales as IMFL volumes are seen to grow 1.5x GDP. Favourable demographics with a median age of 27.9 years and

growing social acceptability of alcobev consumption are likely to bode well for the industry. Affordability of alcohol is still a problem due to the high taxation

on the alcoholic beverages and low penetration and reach in some regions. However category expansion by the companies, and more focus on

premiumization are huge positives for the industry. Also a large number of new consumers are added to the mix as they enter the legal drinking age. There

is also more acceptance of alcohol consumption today in the society. With more urbanisation and higher disposable income in the hands of the consumers,

the industry is set to benefit.

Barriers to Entry

Regulatory oversight of both central and state governments encompass a slew of restrictions on the production, movement and sale of alcobev products.

Alcobev also falls under the purview of Food Safety and Standards Authority of India (FSSAI). In addition, direct advertising of alcobev products are not

permitted in India. Prohibitively high inter-state duties compel national alcobev players to set-up owned or contract manufacturing setups in every state.

Besides, licenses are required to produce, bottle, store, distribute or retail all alcobev products. Distribution is also highly controlled, both at the wholesale

and retail levels. In states with government control on pricing, price increase is based on government notifications. In states where retailing is controlled by

the state government, there is a specified quota that each player can sell, capping potential to increase market share for our products. These regulations

make operations restrictive for the industry players. While these regulations seem harsh, it also means there are very high entry barriers within the industry

which is already very concentrated. USL and Pernod Ricard control majority of the market. A new player entering the market, will require all the government

approvals, source raw materials, set up manufacturing units in multiple states, and figure out the distribution of its products, and do all of this while

competing in the market with the existing well established players without any advertising. Besides many states on an average get ~15-20% of their total

revenues from alcohol taxes, hence Govt. rely on the same.

Premiumisation will be the key for USL

USL’s strong endeavour to strengthen and accelerate its core brands has led to successful premiumisation of its portfolio. This is reflected in an increase in

contribution of the Prestige and above segment from 53% of net sales in the financial year 2016 to 63% of net sales in the financial year 2018.

The management has clearly stated that USL’s long-term plan is to increase the contribution from its premium brands to around 75-80% of its overall business

from ~65% currently. This would translate into higher margins for USL and tie in with the strategy of chasing value rather than volume growth. As part of its

focus on premiumization, last January USL decided to go the franchise route for some of its popular or mass-market brands, which include Bagpiper and

Director’s Special whiskies, in some states.

4 | P a g e

United Spirits

Foods

Investment Idea

Apr 01, 2019

Pernod Ricard, USL’s main competitor, is already 100% in the prestige and above segment. In the non-prestige and above not only are margins low, there is

very little pricing power and branding capability. There are also a lot of smaller Indian players in that space which increases competition. Hence going with

the current trend of increasing sales from the prestige and above category, we can definitely expect better sales in the coming quarters.

Franchising Model

USL is very carefully participating in the Popular segment category by entering into franchise agreements for manufacturing and distribution of the franchised

brands in the respective states. In return, USL earns royalty fee in these states from such franchising. The franchisee agreements are for periods from 3 to 5

years. In FY 2018, USL entered into agreements to franchise Popular segment brands in eight states namely, Chandigarh, Rajasthan, Madhya Pradesh,

Himachal Pradesh, Jammu and Kashmir, Delhi, Sikkim and Uttar Pradesh and now has such a franchising model running in 13 states. By franchising the

popular brands, it gives the management more time and resources to now focus on their more premium brands of the company. It also ensures stability of

margins in the segment, reduces working capital requirements and enables the management to focus on higher margin products.

Country Liquor to IMFL

Organised players like USL stand to benefit from steady growth in the conversion from country liquor to IMFL given increasing health concerns associated

with consumption of country liquor. States like Tamil Nadu and Karnataka have banned the sale of country liquor primarily on account of rising death toll

due to consumption of country liquor. Going forward, more states are expected to follow such a stance which will bode well for companies like USL.

Experienced Professional Management Team

One of the key drivers of growth for the company is its own management. Post the takeover by Diageo, the management team at USL has been completely

revamped. The CEO and MD, Mr. Anand Kripalu, was hired from Modelez International, an American multinational confectionery, food, and beverage

company, where he spent 8 years as head of the India Business. Before that he was at Unilever for 22 years. USL has an exceptional management team

across all functions (Strategy, Corporate Policy, Marketing & Operations) and is backed by the deep expertise, processes and global scale at its parent Diageo.

A large part of the uncertainty inherent in the alcohol beverages business is thus mitigated for USL. Diageo has also initiated steps to revamp the brand

promotions strategy, enhanced supply chain efficiency, focusing on lean portfolio, engaging with the government and improving work culture. Also, the

success of Diageo’s premiumisation strategy is reflected in market share gains by McDowell’s.

5 | P a g e

United Spirits

Foods

Investment Idea

Apr 01, 2019

View & Valuation

United Spirits (USL) has witnessed a remarkable turnaround in its performance since its acquisition by Diageo, a global leader in alcohol beverage nearly five

years ago. The company’s strong focus on premium segments has yielded sweet fruits for the company, with this segment now contributing nearly 66% to

its total sales. For 9M FY19, revenues have grown 12.4% to Rs 6741cr. P&A segment revenue increased 18% yoy and popular segment was flat. EBITDA

margin surged 330bps to 15.8% led by cost control measures across all the expenses. Robust operational performance coupled with strong revenues and

also lower finance costs helped company to post 58% increase in PAT to Rs 532cr.

We estimate 10% revenue cagr on the back of strong traction from P&A segment revenues. We expect P&A revenue to post 12% and Popular segment to

see ~6% cag rove FY19-21E. Operating Margin may continue to improve further and see around 17-17.5% for FY21. Strong revenues and robust margin

expansion would drive 29% PAT growth over FY19-21E. Company has reduced its debt levels considerably over the past few years. Through sustained and

focussed efforts over the last five years, Company has reduced debt by ~66% from ~Rs 8,500 crore to around Rs 3,000 crore. Debt portfolio diversification,

and issuance of commercial papers and non-convertible debentures, together led to ~30% reduction in interest costs. For 9M FY19, Finance costs have

further reduced 25% to Rs 153cr. This directly adds to company’s bottom line, which would boost earnings for USL. For H1 FY19, company reduced ~Rs 650cr

debt and we estimate total debt to get reduced to ~Rs 1000cr or net D/E of ~0.2x in FY21. We recommend buy on the stock at cmp of Rs 549 and add on

dips to Rs 513 with TP of Rs 619 over the 4 quarters. Our target price is based on a P/E multiple of ~40x FY21E earnings and ~25x EV/EBITDA.

Risks & Concerns:

The high regulations not only constrains margins, sales and consumption (given a) lack of economies of scale b) restricted distribution/accessibility for

consumers and c) direct restriction on consumption itself, through limits on number of bottles allowed per family for example) but also results in highly

unpredictable quarter-to-quarter or even year-to-year business results.

The industry is exposed to multiple regulatory risks emanating from state taxes, adverse ruling from courts and changes in regulations with respect to pricing,

licensing, working of operating facilities, manufacturing processes, marketing, advertising and distribution. Last year, Governments in West Bengal,

Chhattisgarh and Jharkhand modified their state liquor sales policy, resulting in the sale of liquor only through government-owned corporations/ retail stores.

The Supreme Court restrictions imposed last year on the sale of alcohol near state and national highways led to the closure of about 30,000 liquor shops,

causing a drop in demand. The court subsequently clarified its ruling, easing conditions for liquor sales and allowing most outlets to reopen. The impact of

highway ban has substantially subsided.

Increased tendency towards prohibition of alcohol in an election year.

Significant changes in route to market strategies by various state governments pose a concern on establishing distribution network with new intermediaries.

This also poses credit risk in case the existing distributors default due to the closure of their respective businesses.

Prohibition in certain states poses a threat to legitimate sales and gives rise to inter-state smuggling impacting industry growth. This may also lead to a

proliferation of country liquor sales in absence of/curtailed availability of branded products.

6 | P a g e

United Spirits

Foods

Investment Idea

Apr 01, 2019

Operating Highlights for 9M FY19

Volumes (mn Cases) 3QFY18 2QFY19 3QFY19 % chg YoY % chg QoQ 9MFY18 9MFY19 % chg YoY

Prestige & Above 9.9 10.5 11.1 12.1 5.7 27.4 31.1 13.5

Popular 11.2 9.9 10.8 (3.6) 9.1 30.2 29.4 (2.6)

Total 21.1 20.4 21.9 3.8 7.4 57.6 60.5 5.0

Net Revenue (Rs mn)

Prestige & Above 14,290 15,060 16,510 15.5 9.6 37,880 44,660 17.9

Popular 7,980 7,110 7,760 (2.8) 9.1 21,050 21,160 0.5

Other Operating Income 363 111 739 103.6 565.8 1,034 1,589 53.7

Total 22,633 22,281 25,009 10.5 12.2 59,964 67,409 12.4

Realization/case (Rs)

Prestige & Above 1,443 1,434 1,487 3.0 3.7 1,382 1,436 3.9

Popular 713 718 719 0.8 0.0 697 720 3.3

Total 1,073 1,092 1,142 6.5 4.6 1,041 1,114 7.0

Gross Profit/case (Rs) 508 536 541 6.4 0.9 490 540 10.2

EBITDA/case (Rs) 129 212 184 42.6 (13.2) 130 176 35.5

Source: Company, HDFC sec Research

7 | P a g e

United Spirits

Foods

Investment Idea

Apr 01, 2019

Revenues Trend


8594 81708924

985110808

4.2

-5

9.210.4 9.7

-10

-5

0

5

10

15

0

2000

4000

6000

8000

10000

12000

FY17 FY18 FY19E FY20E FY21E

Revenues Growth

PAT to see ~28% cagr over FY19-21E


169

549

684

889

113293

25

38

17

27

0

10

20

30

40

50

60

70

80

90

100

0

200

400

600

800

1000

1200


PAT Growth

Prestige & Above revenues to rise further


4996 5128

5905

6672

7458

1000

2000

3000

4000

5000

6000

7000

8000


Revenues Split


66.2

31.4

2.4

Prestige &Above

Popular

Others

8 | P a g e

United Spirits

Foods

Investment Idea

Apr 01, 2019

Net D/E Trend


2.1

1.2

0.8

0.5

0.2

0

0.5

1

1.5

2

2.5


EV/EBITDA Trend


4442.5

32.2

27.1

22.2

0

10

20

30

40

50


9 | P a g e

United Spirits

Foods

Investment Idea

Apr 01, 2019

Income Statement Year ending March (Rs mn) FY18 FY19E FY20E FY21E

Net Revenues 81,701 89,243 98,515 108,079

Growth (%) (4.9) 9.2 10.4 9.7

Raw Material Expenses 42,891 46,333 51,897 56,286

Employee Expenses 6,601 6,357 6,579 6,809

Other Operating Expenses 21,994 23,325 24,546 26,509

Total Operating Expenses 71,486 76,015 83,022 89,605

EBITDA 10,215 13,228 15,493 18,474

EBITDA Margin (%) 12.5 14.8 15.7 17.1

EBITDA Growth (%) 0.6 29.5 17.1 19.2

Depreciation 1,351 1,433 1,419 1,405

EBIT 8,864 11,795 14,075 17,069

Other Income (Including EO Items) 2,060 1,352 1,087 1,141

Interest 2,611 2,055 1,788 1,182

PBT 8,313 11,092 13,373 17,028

Tax (Incl Deferred) 2,786 3,469 4,480 5,704

APAT 5,527 7,623 8,893 11,323

EO (Loss) / Profit (Net Of Tax) (40) (785) - -

RPAT 5,487 6,838 8,893 11,323

APAT Growth (%) 25.1 37.9 16.7 27.3

Adjusted EPS (Rs) 7.6 10.5 12.2 15.6

EPS Growth (%) 25.1 37.9 16.7 27.3 Source: Company, HDFC sec Research

Balance Sheet As at March (Rs mn) FY18 FY19E FY20E FY21E

SOURCES OF FUNDS

Share Capital 1,453 1,453 1,453 1,453

Reserves 23,585 30,423 39,316 50,640

Total Shareholders’ Funds 25,038 31,876 40,769 52,093

Minority Interest

Long Term Debt 7,527 6,398 4,798 3,599

Short Term Debt 24,935 21,370 16,500 5,968

Total Debt 32,462 27,768 21,298 9,567

Other Noncurrent liabilities 512 563 620 681

TOTAL SOURCES OF FUNDS 58,012 60,207 62,687 62,341

APPLICATION OF FUNDS

Net Block 11,001 10,573 10,221 9,928

Investments in subsidiaries 2,775 2,636 2,504 2,379

Other non-current assets 16,921 17,632 18,462 19,423

Total Non-current Assets 30,697 30,841 31,187 31,730

Inventories 18,694 19,499 20,985 22,134

Debtors 26,998 28,424 30,837 32,943

Other Current Assets 7,711 8,172 9,021 9,305

Assets classified as held for sale 1,417 709 354 177

Total Current Assets 54,820 56,804 61,198 64,559

Creditors 14,240 13,903 15,348 16,838

Other Current Liabilities 14,463 14,772 16,295 17,887

Total Current Liabilities 28,703 28,676 31,643 34,725

Net Current Assets 26,117 28,128 29,555 29,834

Cash & Equivalents 1,198 1,238 1,945 776

TOTAL APPLICATION OF FUNDS 58,012 60,207 62,687 62,341 Source: Company, HDFC sec Research

10 | P a g e

United Spirits

Foods

Investment Idea

Apr 01, 2019

Cash Flow Statement Year ending March (Rs mn) FY18 FY19E FY20E FY21E

PBT 8,313 11,092 13,373 17,028

Non-operating & EO Items (2,060) (1,352) (1,087) (1,141)

Interest 2,611 2,055 1,788 1,182

Depreciation 1,351 1,433 1,419 1,405

Working Capital Change 2,379 (2,011) (1,426) (279)

Tax Paid (2,786) (3,469) (4,480) (5,704)

OPERATING CASH FLOW ( a ) 9,808 7,748 9,587 12,490

Capex 371 (1,005) (1,066) (1,112)

Free cash flow (FCF) 10,179 6,743 8,521 11,378

Investments (1,207) (521) (643) (773)

Non-operating Income 2,020 567 1,087 1,141

INVESTING CASH FLOW ( b ) 1,184 (959) (622) (744)

Debt Issuance/(Repaid) (7,879) (4,694) (6,469) (11,732)

Interest Expenses (2,611) (2,055) (1,788) (1,182)

FCFE (9,306) (7,708) (8,880) (13,658)

Share Capital Issuance - - - -

Dividend - - - -

Others 173 0 0 -

FINANCING CASH FLOW ( c ) (10,317) (6,750) (8,258) (12,914)

NET CASH FLOW (a+b+c) 675 40 707 (1,169)

Closing Cash 1,198 1,238 1,945 776 Source: Company, HDFC sec Research

Key Ratios FY18 FY19E FY20E FY21E

PROFITABILITY (%)

Gross Profit Margin 47.5 48.1 47.3 47.9

EBITDA Margin 12.5 14.8 15.7 17.1

EBIT Margin 10.8 13.2 14.3 15.8

APAT Margin 6.8 8.5 9.0 10.5

RoE 24.9 26.8 24.5 24.4

RoIC (or Core RoCE) 10.4 13.8 15.6 18.9

RoCE 10.3 13.7 15.4 18.6

EFFICIENCY

Tax Rate (%) 33.5 31.3 33.5 33.5

Fixed Asset Turnover (x) 7.4 8.4 9.6 10.9

Inventory (days) 83.5 79.8 77.8 74.8

Debtors (days) 120.6 116.3 114.3 111.3

Payables (days) 63.6 56.9 56.9 56.9

Cash Conversion Cycle (days) 116.7 115.0 109.5 100.8

Net Debt/EBITDA (x) 3.1 2.0 1.2 0.5

Net D/E (x) 1.2 0.8 0.5 0.2

Interest Coverage (x) 0.3 0.2 0.1 0.1

PER SHARE DATA (Rs)

EPS 7.6 10.5 12.2 15.6

CEPS 9.5 12.5 14.2 17.5

Dividend - - - -

Book Value 34.5 43.9 56.1 71.7

VALUATION

P/E (x) 73.3 53.1 45.3 35.5

P/BV (x) 16 12.2 9.5 7.5

EV/EBITDA (x) 42.4 32.8 27.3 22.2

EV/Revenues (x) 5.5 5.0 4.4 3.9


11 | P a g e

United Spirits

Foods

Investment Idea

Apr 01, 2019

Ratings Chart

R E T U R N

HIGH

MEDIUM

LOW

LOW MEDIUM HIGH

RISK

Ratings Explanation:

RATING Risk - Return BEAR CASE BASE CASE BULL CASE

BLUE LOW RISK - LOW RETURN STOCKS

IF RISKS MANIFEST, PRICE CAN FALL 20%

OR MORE

IF RISKS MANIFEST, PRICE CAN FALL 15% &

IF INVESTMENT RATIONALE FRUCTFIES, PRICE CAN RISE BY 15%

IF INVESTMENT RATIONALE

FRUCTFIES, PRICE CAN RISE BY 20% OR MORE

YELLOW MEDIUM RISK - HIGH RETURN STOCKS


OR MORE




FRUCTFIES, PRICE CAN RISE BY 35% OR MORE

RED HIGH RISK - HIGH RETURN STOCKS


OR MORE




FRUCTFIES, PRICE CAN RISE BY 50% OR

MORE

# Explanation of Red-flag Price level: If stock prices starts sustaining below red-flag level, the premise of the investment needs to be reviewed. Risk averse

investors should exit the stock and preserve capital. The downside of following red-flag level is that if the price decline turns out to be temporary and if

it recovers, subsequently you won’t be able to participate in the gains.

12 | P a g e

United Spirits

Foods

Investment Idea

Apr 01, 2019

Price Chart

50

100

150

200

250

300

350

400

450

500

550

600

650

700

750

Rating Definition:

Buy: Stock is expected to gain by 10% or more in the next 1 Year. Sell: Stock is expected to decline by 10% or more in the next 1 Year.

13 | P a g e

United Spirits

Foods

Investment Idea

Apr 01, 2019

Research Analyst: Kushal Rughani ([email protected])

HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022) 3075 3450 Compliance Officer: Binkle R. Oza Email: [email protected] Phone: (022) 3045 3600 SEBI Registration No.: INZ000186937 (NSE, BSE, MSEI, MCX) |NSE Trading Member Code: 11094 | BSE Clearing Number: 393 | MSEI Trading Member Code: 30000 | MCX Member Code: 56015 | AMFI Reg No. ARN -13549, PFRDA Reg. No - POP 04102015, IRDA Corporate Agent Licence No.-HDF2806925/HDF C000222657, Research Analyst Reg. No. INH000002475, CIN-U67120MH2000PLC152193. Disclosure: I, (Kushal Rughani, MBA), authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. HSL has no material adverse disciplinary history as on the date of publication of this report. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Research Analyst or his/her relative or HDFC Securities Ltd. does not have any financial interest in the subject company. Also Research Analyst or his relative or HDFC Securities Ltd. or its Associate does not have beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding the date of publication of the Research Report. Further Research Analyst or his relative or HDFC Securities Ltd. or its associate does not have any material conflict of interest. Any holding in stock – No HDFC Securities Limited (HSL) is a SEBI Registered Research Analyst having registration no. INH000002475. Disclaimer: This report has been prepared by HDFC Securities Ltd and is meant for sole use by the recipient and not for circulation. The information and opinions contained herein have been compiled or arrived at, based upon information obtained in good faith from sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. This document is for information purposes only. Descriptions of any company or companies or their securities mentioned herein are not intended to be complete and this document is not, and should not be construed as an offer or solicitation of an offer, to buy or sell any securities or other financial instruments. This report is not directed to, or intended for display, downloading, printing, reproducing or for distribution to or use by, any person or entity who is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, reproduction, availability or use would be contrary to law or regulation or what would subject HSL or its affiliates to any registration or licensing requirement within such jurisdiction. If this report is inadvertently send or has reached any individual in such country, especially, USA, the same may be ignored and brought to the attention of the sender. This document may not be reproduced, distributed or published for any purposes without prior written approval of HSL. Foreign currencies denominated securities, wherever mentioned, are subject to exchange rate fluctuations, which could have an adverse effect on their value or price, or the income derived from them. In addition, investors in securities such as ADRs, the values of which are influenced by foreign currencies effectively assume currency risk. It should not be considered to be taken as an offer to sell or a solicitation to buy any security. HSL may from time to time solicit from, or perform broking, or other services for, any company mentioned in this mail and/or its attachments. HSL and its affiliated company(ies), their directors and employees may; (a) from time to time, have a long or short position in, and buy or sell the securities of the company(ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions. HSL, its directors, analysts or employees do not take any responsibility, financial or otherwise, of the losses or the damages sustained due to the investments made or any action taken on basis of this report, including but not restricted to, fluctuation in the prices of shares and bonds, changes in the currency rates, diminution in the NAVs, reduction in the dividend or income, etc. HSL and other group companies, its directors, associates, employees may have various positions in any of the stocks, securities and financial instruments dealt in the report, or may make sell or purchase or other deals in these securities from time to time or may deal in other securities of the companies / organizations described in this report.

HSL or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months. HSL or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from t date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction in the normal course of business. HSL or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither HSL nor Research Analysts have any material conflict of interest at the time of publication of this report. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. HSL may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Research entity has not been engaged in market making activity for the subject company. Research analyst has not served as an officer, director or employee of the subject company. We have not received any compensation/benefits from the subject company or third party in connection with the Research Report. This report is intended for non-Institutional Clients only. The views and opinions expressed in this report may at times be contrary to or not in consonance with those of Institutional Research or Retail Research teams of HDFC Securities Ltd. and/or may have different time horizons. Disclaimer : HDFC securities Ltd is a financial services intermediary and is engaged as a distributor of financial products & services like Corporate FDs & Bonds, Insurance, MF, NPS, Real Estate services, Loans, NCDs & IPOs in strategic distribution partnerships. Investment in securities market are subject to market risks, read all the related documents carefully before investing. Customers need to check products &features before investing since the contours of the product rates may change from time to time. HDFC securities Ltd is not liable for any loss or damage of any kind arising out of investments in these products. Investments in Equity, Currency, Futures & Options are subject to market risk. Clients should read the Risk Disclosure Document issued by SEBI & relevant exchanges & the T&C on www.hdfcsec.com before investing. Equity SIP is not an approved product of Exchange and any dispute related to this will not be dealt at Exchange platform.



Investment Idea United Spirits Apr 01, 2019 Foods · The Indian alcobev industry is segmented into...

Documents

Transcript of Investment Idea United Spirits Apr 01, 2019 Foods · The Indian alcobev industry is segmented into...