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United Spirits – White & Mackay getting stronger

July 22, 2008

United Spirits reported June stand-alone profit grew 34% to Rs1.1bn. Domestic sales grew ~25-26% led by vol. gr of 19% and balance thru price and mix. Volume growth was higher than trend growth rate of 11-12%. Key premium brands grew 17%, again higher than trend. Mgmt expects key premium brands to grow 12-13% in FY09 but tactical moves to tap the low price brands may lead to stronger volume growth.

June EBITDA grew 27% & margins declined 90bp led by 55% jump in advertising (IPL expenses). The company is expected to report an EPS of Rs 46.55 for FY09. Whyte & Mackay sales grew 40% and EBITDA grew 70% led by new business opportunity of own labels and tactical sales of younger scotch. W&M constitute 21% of United Spirits’ sales.

United Spirits is India’s largest spirits player. In FY08 it sold 74mn cases which gives it a volume share of 52%.

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