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SYNOPSIS

United Spirits Limited (USL) is the

flagship company of the UB Group -

has been the metaphor for the finest

spirits produced across the world.

During the quarter, USL undertook a

GBP 370 million re-finance of the

remnant debt originally taken for the

acquisition of W&M.

During the quarter ended, the robust

growth of Net Profit is increased by

98.39% to Rs. 1480.00 million.

USL is Market Leader with over 59%

market share of India Spirits

Business.

During the quarter, USL progressively

increased its shareholding in

Sovereign Distilleries Ltd with a 180

Kilo Liters per Day facility using both

molasses & grain as input substrates.

Net Sales and PAT of the company

are expected to grow at a CAGR of

22% and 19% over 2010 to 2013E

respectively.

Years Net sales EBITDA Net Profit EPS P/E

FY 11 64180.80 10321.70 3854.90 29.47 20.73

FY 12E 78300.58 13490.10 5476.39 41.87 14.59

FY 13E 90828.67 15512.04 6403.66 48.96 12.48

Stock Data:

Sector: Breweries

Face Value Rs. 10.00

52 wk. High/Low (Rs.) 1500.00/585.85

Volume (2 wk. Avg.) 67000.00

BSE Code 532432

Market Cap (Rs in mn) 79918.80

Share Holding Pattern

1 Year Comparative Graph

United Spirits BSE SENSEX

C.M.P: Rs. 611.00 Target Price: Rs. 684.00 Date: Dec. 22nd 2011 BUY

United Spirits Ltd Result Update: Q2 FY 12

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Peer Group Comparison

Name of the company CMP(Rs.) Market Cap. (Rs. mn.) EPS(Rs.) P/E(x) P/Bv(x) Dividend (%)

United Spirits Ltd. 611.00 79918.80 29.47 20.73 1.57 25.00

United Breweries 396.20 10085.07 6.30 62.89 9.63 36.00

Radico Khaitan 109.70 1455.76 5.53 19.84 2.23 35.00

Jagatjit Inds. 56.90 262.58 11.79 4.83 1.30 0.00

Investment Highlights

Q2 FY12 Results Update

United Spirits Ltd. has reported net profit of Rs 1480.00 million for the quarter

ended on September 30, 2011 as against Rs 746.00 million in the same quarter

last year, an increase of 98.39%. It has reported net sales of Rs 18663.10 million

for the quarter ended on September 30, 2011 as against Rs 13655.30 million in the

same quarter last year, a rise of 36.67%. Total income grew by 40.43% to

Rs.19057.90 million from Rs.13571.00 million in the same quarter last year.

During the quarter, it reported earnings of Rs 11.31 a share.

Quarterly Results - Standalone (Rs in mn)

As At Sep-11 Sep-10 %change

Net sales 18663.10 13655.30 36.67%

PAT 1480.00 746.00 98.39%

Basic EPS 11.31 5.94 90.49%

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� Break up of Expenditure

Company Profile

United Spirits Limited (USL) - earlier known as the McDowell & Co. Ltd. and the

flagship company of the UB Group - has been the metaphor for the finest spirits

produced across the world. With more than 140 brands across different flavors such

as Scotch, Whisky, Vodka, Rum, Brandy and imported Wines, USL has the most

sought-after brand portfolio in the industry.

USL is Market Leader with over 59% market share of India Spirits Business.

United Spirits Limited (USL) is the largest spirits company in the world by volume,

selling 114 million cases for the fiscal ending March 31, 2011.

Besides Whyte & Mackay and Bouvet Ladubay being 100% subsidiaries of USL, the

company has 21 millionaire brands (selling more than a million cases a year) in its

portfolio and enjoys a strong 59% market share for its first line brands in India.

United Spirits' brands have won the most prestigious awards for flavors, ranging from

Mondial to International Wine and Spirit Competition (IWSC) to International Taste &

Quality Institute (ITQI); more than 115 awards & certificates.

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The Company is known to be an innovator in the industry and has several firsts to its

credit like the first pre-mixed gin, the first Tetrapack in the spirits industry in India,

first single malt manufactured in Asia and the first diet versions of whisky and vodka

in India.

USL has a global footprint with exports to over 37 countries. It has a sizeable presence

in India with distilleries and sales offices all across the country, and a committed team

of over 7500 people dedicated to the fulfillment of the company's mission. It has

established manufacturing and bottling plants in every state of India. In addition, to

deliver its products to customers located anywhere in India, USL has established a

robust distribution network covering the whole country.

Brands

With more than 140 brands across different flavors such as Scotch, Whisky, Vodka,

Rum, Brandy and imported Wines, USL has the most sought-after brand portfolio in

the industry. The fact that 21 out of the 140 brands are "Millionaire Brands" (those

that sell more than a million cases per annum) is a definite indication to the reach and

popularity of USL's brands.

� Dalmore

� Jura

� Whyte & mackay

� Black Dog

� Antiquity

� Signature

� Royal Challenge

� McDowell’s No.1

� McDowell’s No.1 Platinum

� Bagpiper

� Celebration Rum

� Bouvet Ladubay

� Pinky

� Romanov

� White Mischief

� Four Seasons

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Financial Results

12 Months Ended Profit & Loss Account (Standalone)

Value(Rs.in.mn) FY10 FY11 FY12E FY13E

Description 12m 12m 12m 12m

Net Sales 49794.70 64180.80 78300.58 90828.67

Other Income -25.80 -173.40 570.50 616.14

Total Income 49768.90 64007.40 78871.08 91444.81

Expenditure -40849.70 -53685.70 -65380.98 -75932.77

Operating Profit 8919.20 10321.70 13490.10 15512.04

Interest -3096.20 -4027.90 -4752.92 -5323.27

Gross profit 5823.00 6293.80 8737.17 10188.77

Depreciation -386.30 -477.50 -563.45 -631.06

Profit Before Tax 5436.70 5816.30 8173.72 9557.70

Tax -1676.50 -1961.40 -2697.33 -3154.04

Profit After Tax 3760.20 3854.90 5476.39 6403.66

Equity capital 1255.90 1308.00 1308.00 1308.00

Reserves 46491.90 49619.70 55096.09 61499.76

Face Value 10.00 10.00 10.00 10.00

EPS 29.94 29.47 41.87 48.96

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Quarterly Ended Profit & Loss Account (Standalone)

Value(Rs.in.mn) 31-Mar-11 30-Jun-11 30-Sep-11 31-Dec-11E

Description 3m 3m 3m 3m

Net sales 16171.90 19444.90 18663.10 22022.46

Other income -0.40 8.20 394.80 197.40

Total Income 16171.50 19453.10 19057.90 22219.86

Expenditure -13839.10 -16051.20 -15455.40 -18410.77

Operating profit 2332.40 3401.90 3602.50 3809.08

Interest -1044.30 -1227.30 -1241.40 -1303.47

Gross profit 1288.10 2174.60 2361.10 2505.61

Depreciation -129.90 -127.00 -151.70 -171.42

Profit Before Tax 1158.20 2047.60 2209.40 2334.19

Tax -383.80 -670.50 -729.40 -770.28

Profit After Tax 774.40 1377.10 1480.00 1563.91

Equity capital 1307.90 1308.00 1308.00 1308.00

Face Value 10.00 10.00 10.00 10.00

EPS 5.92 10.53 11.31 11.96

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Key Ratio

Particulars FY10 FY11 FY12E FY13E

No. of shares (in mn) 125.59 130.80 130.80 130.80

EBIDTA % 17.91% 16.08% 17.23% 17.08%

PBT % 10.92% 9.06% 10.44% 10.52%

PAT % 7.55% 6.01% 6.99% 7.05%

P/E ratio (x) 20.41 20.73 14.59 12.48

ROE - % 7.88% 7.57% 9.71% 10.20%

ROCE - % 11.22% 12.41% 14.90% 15.74%

Debt Equity Ratio 0.74 0.71 0.67 0.63

EV/EBITDA (x) 8.60 7.74 5.92 5.15

Book Value (Rs.) 380.19 389.36 431.22 480.18

Price/Book Value 1.61 1.57 1.42 1.27

Charts: Net sales & PAT

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P/E Ratio (x)

Debt Equity Ratio

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EV/EBITDA (x)

P/BV (x)

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Outlook and Conclusion

At the current market price of Rs.611.00, the stock is trading at 14.59 x FY12E

and 12.48 x FY13E respectively.

Earning per share (EPS) of the company for the earnings for FY12E and FY13E

is seen at Rs.41.87 and Rs.48.96 respectively.

Net Sales and PAT of the company are expected to grow at a CAGR of 22% and

19% over 2010 to 2013E respectively.

On the basis of EV/EBITDA, the stock trades at 5.92 x for FY12E and 5.15 x for

FY13E.

Price to Book Value of the stock is expected to be at 1.42 x and 1.27 x

respectively for FY12E and FY13E.

We expect that the company will keep its growth story in the coming quarters

also. We recommend ‘BUY’ in this particular scrip with a target price of

Rs.684.00 for Medium to Long term investment.

Industry Overview

The International Alcoholic Beverage Industry comprises mainly of Spirits, Beer and

Wine. The international industry for Spirits is estimated to be around 2200 million

cases (1 case = 9 Bulk Liters) in the calendar year 2010. The traditional dominance of

‘Whites’ – Vodka, White Rum and Gin continues in the international sphere.

The Indian Branded Spirits Industry was around 270 million cases in Fiscal year

2010-11 or 12.3% of the international industry. Contrary to international trends, India

continues to remain a ‘Browns’ market with Whisky, Rum and Brandy being the

dominant flavors. It is a matter of pride that United Spirits Limited, Company has

become, in 2010, the largest distilled Spirits marketer in the world by volume, with

sales of over 112 million cases in India. Including the sales of its international

subsidiaries, the volume figure stands at just under 114 million cases. The Company

pipped long time industry leader Diageo to the number one spot. The high point of

this achievement is that almost all of Company's volume has been sold in a single

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geography, viz. India, in contrast to the world-wide spread of other international

players. Growths in the Indian Spirits market have been way above that of other

geographies. The Company's brands grew over 12% in the last Fiscal; the world’s top

100 Spirits brands grew just 4.3%. 17 of the top 25 global premium Spirits brands

either lost ground or grew less than 5%. Well-known names like Smirnoff, Bacardi,

Johnnie Walker and Absolut, collectively added less than 3 million cases during the

year, while the Company's brands added over 12 million cases. The Indian Spirits

market has grown at a CAGR of 15% over the last 5 years while Company has

outperformed the Industry during the same period with a growth of just under 17%.

______________ ____ _________________________ Disclaimer:

This document prepared by our research analysts does not constitute an offer or solicitation

for the purchase or sale of any financial instrument or as an official confirmation of any

transaction. The information contained herein is from publicly available data or other

sources believed to be reliable but do not represent that it is accurate or complete and it

should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s

affiliates shall not be in any way responsible for any loss or damage that may arise to any

person from any inadvertent error in the information contained in this report. This document

is provide for assistance only and is not intended to be and must not alone be taken as the

basis for an investment decision.

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