Neutral United Breweries Hits Target Price of Rs 1425: Motilal Oswal Recommendation

United Breweries Reports 3% YoY Revenue Decline Despite 4% Volume Growth

United Breweries (UBBL), a leading brewer in the Indian market, has reported a 3% year-over-year (YoY) decline in revenue, contrary to the estimated growth of 7% and 4% in the third quarter. This decline is attributed to a 7% reduction in realization due to a temporary higher mix of contract manufacturing. Notably, the company's secondary volume growth was healthy at 8-9% YoY.

The premium portfolio of United Breweries delivered a robust 16% volume growth, surpassing the 21% growth recorded in the previous fiscal year (FY26). The overall beer industry growth was approximately 10% at the consumer level, driven by favorable regulatory developments, improved affordability, and stable demand conditions.

Outlook for United Breweries

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The company's earnings before interest, taxes, depreciation, and amortization (EBITDA) margin is expected to reach 9.5% in the fiscal year 2027. However, there is a potential downside risk to this projection if cost inflation persists. Considering the rich valuations and lingering cost headwinds, Motilal Oswal's research team has reiterates a Neutral rating on the stock with a target price of INR1,425. This target price is based on a price-to-earnings multiple of 50 times the estimated earnings per share (EPS) for March 2028.