Is the King of good times, still good? Buy Rating with Target of 1904
World 23rd Largest and India’s top ranked Beverage company- United Breweries Ltd
The Company markets its products under the flagship brands Kingfisher and Heineken, some of the most popular brands in its portfolio include Kingfisher Premium, Kingfisher Ultra, Kingfisher Strong, etc.UBL has a market share of 52% domestically as of March 2022 and its geographical split comprises 99% domestic sales. Subsidiary of European No 2 Beer Giant Heineken which holds 61% shares in the company and an annual output of 9 million hectolitres, makes it among the top Beer manufacturers in the world.
From 2008 to now, the stock has witnessed a rally of 848% at a CAGR of 22%. So, ‘’Is the king of good times, still good’’?
Indian Beer Market have reached a value of INR 350 billion in 2021 and it is Looking forward to growing multi fold in the time to come.
As per the statistics, Bars and pubs have grown faster than cafes, over the past two years driven by younger consumers.
Bars and pubs as a category have witnessed a growth of 23.5% over a period of 2 years. Considering number of product mix in the Brew’s, it will be conservative to expect a CAGR growth of 12% for Beer Industry. We estimate UBL to grow to a revenue of INR 10500 Cr by FY 24 with EBITDA of INR 1575 Cr.
Indian Beer Market >>
Key Financial summary >>
|
INR in CR |
Actual |
Forecast |
||||
|
FY 20 |
FY 21 |
FY 22 |
FY 23 |
FY 24 |
CAGR 2 Year |
|
|
Net Sales |
6502 |
4243 |
5838 |
7377 |
10500 |
19% |
|
EBIDTA |
875 |
381 |
697 |
1062 |
1575 |
37% |
|
PAT |
427 |
113 |
365 |
600 |
1050 |
44% |
|
P/E |
45 |
70 |
104 |
66 |
52 |
|
|
Market cap to sales (x) |
6.3 |
9.6 |
7 |
5.5 |
4.9 |
|
|
ROCE % |
15.90% |
4% |
12.20% |
18.20% |
24.00% |
|
|
ROE % |
12.20% |
3.20% |
9.30% |
14.30% |
19.00% |
|
|
|
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Looking at the growth trend in the Beer segment, we rate UBL a buy with target price of 1900 levels
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