Stock Research Report – May 2025
Prepared by: Independent Equity Research Desk
Q4 FY2025 Results Overview
United Breweries Limited (UBL), India’s leading beer manufacturer, delivered a steady performance in Q4 FY2025, riding on volume recovery and premiumization despite an inflationary raw material environment.
- Revenue: ₹2,343 Cr, reflecting a growth of 9.2% YoY.
- EBITDA: ₹237 Cr, up by 11.5% YoY, supported by price hikes and improved operational efficiencies.
- EBITDA Margin: Marginally improved to 10.1% from 9.8% last year.
- Profit After Tax (PAT): ₹127 Cr, marking a 13.4% YoY growth.
Volumes recovered sequentially, especially in key states like Maharashtra, Karnataka, and Telangana. The company’s premium beer segment (led by Kingfisher Ultra and Heineken Silver) grew faster, contributing meaningfully to margins.
Key Highlights and Metrics (As of May 2025)
| Metric | Value |
|---|---|
| Market Cap | ₹57,688 Cr |
| Current Price | ₹2,182 |
| 52-Week High / Low | ₹2,300 / ₹1,810 |
| Stock P/E | 125x |
| Book Value | ₹165 |
| Dividend Yield | 0.46% |
| ROCE | 13.9% |
| ROE | 10.8% |
| Debt | ₹620 Cr |
| Reserves | ₹4,337 Cr |
| Sales Growth (TTM) | 9.76% |
| Profit Growth (TTM) | 12.2% |
| Promoter Holding | 70.8% |
| Pledged Shares | 12.4% |
Valuation Perspective
At a trailing P/E of 125x, UBL commands a premium over peers, justified partially by its market leadership (~50% share in Indian beer market) and strong brand equity. However, current valuation appears stretched against historical averages (70-80x P/E), implying limited short-term upside unless earnings growth accelerates.
Dividend Yield stands modest at 0.46%, aligning with its growth-oriented stance and ongoing CAPEX commitments.
CAPEX & Growth Strategy
UBL is executing a calibrated CAPEX cycle of approximately ₹600-700 Cr over FY2025-27 to:
- Expand capacity in key consumption states (Odisha, Telangana, UP).
- Strengthen its premium portfolio through new product launches (Heineken Silver and Kingfisher Ultra Max variants).
- Invest in green technologies to cut water and energy usage by 20% by FY2027.
The company is targeting double-digit volume growth driven by market share gains in North & East India, and premiumization-led margin expansion. This marks a structural shift in their strategy, tilting towards premium beers which command 3-5% higher margins.
Long-Term Projections (5-20 Years Outlook)
| Period | Sales CAGR | PAT CAGR | Expected Stock Return |
|---|---|---|---|
| 5 Years | ~11-13% | 13-15% | ~14-16% CAGR |
| 10 Years | ~10-11% | 12-13% | ~13-14% CAGR |
| 15 Years | ~9-10% | 11-12% | ~12-13% CAGR |
| 20 Years | ~8-9% | 10-11% | ~11-12% CAGR |
If premiumization sustains and beer category penetration deepens (currently under 10% of India’s alcohol market), UBL has potential for multidecade growth. However, near-term returns will hinge on margin stabilization and volume pickup in tier-2 and rural India.
Management Quality & Credit Rating
UBL enjoys strong parentage from Heineken (global beer giant holding majority control). Management execution has been sound, demonstrated by:
- Smooth transition post Heineken takeover.
- Cost rationalization amidst commodity inflation.
- Focused CAPEX execution.
Credit Rating: No recent downgrades or upgrades noted. Current debt levels are modest at ₹620 Cr with robust cash reserves, ensuring comfortable servicing.
Future Plans & Expansion Roadmap
UBL’s future blueprint is underpinned by:
- Expanding manufacturing footprint in emerging beer-consuming states.
- Growing premium share to 30% of overall sales by FY2027 from current 22%.
- Deploying digital initiatives (e-commerce in legal states) and leveraging tech for supply chain efficiencies.
- ESG goals targeting carbon neutrality by 2040, indicating a sustainability-driven roadmap.
Investment Summary
United Breweries stands tall as a market leader in India’s structurally growing beer market. While valuations are rich, its brand strength, premiumization strategy, and balance sheet health make it a compelling long-term compounder.
For investors with a 10-20 year horizon, UBL offers exposure to India’s rising per capita beer consumption story. However, near-term upside may be capped unless earnings growth accelerates beyond current expectations.
Disclaimer
This research report is for informational purposes only and does not constitute investment advice or recommendation to buy or sell securities. Investors must do their own due diligence or consult their financial advisors before taking investment decisions. Past performance is not indicative of future results.