United Spirits Ltd dropped for a fifth straight session today. The stock is quoting at Rs 576.6, down 0.16% on the day as on 13:24 IST on the NSE. The benchmark NIFTY is down around 0.24% on the day, quoting at 11175.5. The Sensex is at 38013.47, down 0.15%.United Spirits Ltd has eased around 3.77% in last one month.Meanwhile, Nifty FMCG index of which United Spirits Ltd is a constituent, has increased around 2.12% in last one month and is currently quoting at 30948.5, down 0.24% on the day. The volume in the stock stood at 16.24 lakh shares today, compared to the daily average of 33.6 lakh shares in last one month.

The benchmark July futures contract for the stock is quoting at Rs 574.75, down 0.8% on the day. United Spirits Ltd tumbled 2.94% in last one year as compared to a 0.52% rally in NIFTY and a 6.22% spurt in the Nifty FMCG index.

The PE of the stock is 114.36 based on TTM earnings ending June 20.

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Net sales during the quarter tumbled 54% YoY to Rs 1030 crore. Pre-tax loss in the June quarter stood at Rs 257 crore as against pre-tax profit of Rs 303 crore posted in the corresponding period last year.

The alcoholic beverages manufacturer's total sales volume declined 49% to 9.8 EUm (Equivalent Units in millions) in Q1 FY21 from 19.3 EUm reported in Q1 FY20. On the segmental front, prestige & above segment witnessed 52% fall in volumes as it stood at 5 EUm while the popular segment's volumes contracted by 47% to 4.8 EUm in Q1 FY21 over Q1 FY20.

The prestige & above segment accounted for 66% of net sales during the first quarter, up 2 ppts compared to same period last year, primarily due to the one-time sale of bulk Scotch affecting the relative salience of the segments last year. The popular segment accounted for 30% of net sales during the first quarter, up 1 ppts compared to same quarter last year, in part due to the one-time sale of bulk Scotch affecting the relative salience of the segments last year; net of that, the segment salience was flat versus last year.

The company's EBITDA was negative at Rs (78) crore and EBITDA margin was (7.5)%, driven by contraction in gross margin, negative impact of operating leverage, and COVID induced ageing related provisions.

On a consolidated basis, the liquor maker reported a net loss of Rs 241.50 crore in Q1 FY21 as against a net profit of Rs 202.10 crore in Q1 FY20. Net sales during the quarter declined 57.6% year-on-year (YoY) to Rs 1031.90 crore.

Anand Kripalu, CEO, USL, said: “During the quarter, our business was severely impacted by COVID-19 led lockdown and the ensuing disruption. The business remained shut for more than a month during the quarter and it resumed only gradually thereafter, in line with varying state level restrictions. The on-premise channel continued to remain shut for the entire quarter.

The Prestige and Above segment was disproportionately impacted by the closure of the on-premise channel and the drying up of social occasions for consumption. From a profitability perspective, zero sales for more than a month coupled with the negative impact of operating leverage, and certain one-off expenses like COVID led obsolete inventory and ageing based provisions severely impacted our profitability, resulting in a net loss for the quarter.

Looking ahead, we will have to navigate several unknowns over the course of this year, including state level lockdowns that are being re-imposed as well as the real impact of recent tax related price increases on demand. Hence, we will continue to evolve and dynamically manage the situation in the near term, while staying committed to investing for the success of our business and staying true to our longer-term strategy.”

Meanwhile, the board of directors of United Spirits has approved to subscribe to 19,50,000 Cumulative Convertible Preference Shares (CCPS) of Hip Bar, for a subscription price of Rs 19,500,000. The shareholding on fully diluted basis including the existing shareholding is expected to be 26% when the CCPS is exercised.

Hip Bar is building digital ecosystem servicing the beverage alcohol industry and its consumers. It is believed that Hip Bar's platform should provide growth opportunities for the company's online/e-commerce route to market. The investment enables the company to participate in Hip Bar's growth and further strengthen the company's partnership with Hip Bar.

United Spirits (USL) manufactures and distributes a variety of alcohols and spirits, including whiskey, brandy and rum. The company also manufactures Indian-made foreign liquor brands.

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Net loss of United Spirits reported to Rs 241.50 crore in the quarter ended June 2020 as against net profit of Rs 202.10 crore during the previous quarter ended June 2019. Sales declined 57.59% to Rs 1031.90 crore in the quarter ended June 2020 as against Rs 2433.10 crore during the previous quarter ended June 2019.

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United Spirits announced that the Annual General Meeting (AGM) of the company will be held on 26 August 2020.

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