On Thursday, BofA Securities upgraded United Spirits Ltd. (NSE:UNSP:IN) stock from Neutral to Buy and increased the price target to INR1,610.00, up from INR1,510.00. BofA Securities anticipates that United Spirits will achieve a steady 10% revenue compound annual growth rate (CAGR) and a 17% earnings CAGR from the fiscal year 2024 to 2027, surpassing the average growth of other companies covered by the firm.
The upgrade reflects BofA Securities’ view that United Spirits is well-positioned in the current economic climate, with its focus on premiumization and portfolio reshaping expected to drive positive outcomes. The firm also sees the regulatory and operational environment as more favorable for the company, citing business developments in the key state of Andhra Pradesh, a premiumization push in Karnataka, and a return to normalcy in Punjab as positive catalysts for the company’s growth.
In terms of profit margins, BofA Securities believes United Spirits will maintain a healthy profile. This outlook is supported by manageable input costs, excluding Extra Neutral Alcohol (ENA), and ongoing productivity initiatives. These factors are expected to balance out any potential impacts from branding, market development, and other investments aimed at future growth.
United Spirits’ strategic efforts to reshape and enhance its premium product offerings are anticipated to yield fruitful results. The company’s focus on this segment is part of a broader industry trend towards premium products, which often provide higher margins and growth potential.
The stock’s upgrade and target price increase by BofA Securities signal confidence in United Spirits’ potential for revenue and earnings growth, as well as its ability to navigate the current macroeconomic environment effectively.
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