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United Spirits a good buying opportunity, says Edelweiss Securities
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United Spirits a good buying opportunity, says Edelweiss Securities
Jul 24, 2018 12:31 AM

Alcoholic beverages company United Spirits is a good buying opportunity, said Abneesh Roy of Edelweiss Securities, adding that the price target for the stock is around Rs 750.

United Spirits reported a revenue jump of 13 percent at Rs 2011.9 crore versus Rs 1781.8 crore for the same quarter last fiscal. The year-on-year (YoY) EBITDA was up 22 percent at Rs 192.3 crore versus Rs 157 crore.

The YoY employee expenses for the quarter came in at Rs 204.8 crore versus Rs 165.8 crore and ad expenses stood at Rs 211 crore versus Rs 162 crore.

Roy said that the sales and volumes were in line with expectation. However, he said that there was a miss in terms of EBITDA due to two reasons-"one was higher ad spends by 30 percent YoY due to IPL and FIFA. Two, restructuring cost of Rs 36 crore versus Rs 12 crore in the base, so Rs 24 crore of higher cost in terms of employees cost".

"However, the employee costs will lead to higher savings in the coming quarters," said Roy.

He said that the sales growth was good but could have been much higher.

"Currently, the bigger concern for the company is to improve market share and normalise ad spends," he added.

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