Asia FX moves little with focus on US-China trade, dollar steadies ahead of CPI
On Friday, DAM Capital analysts issued a downgrade for United Breweries (NSE:UBBW) Ltd. (UBBL:IN) from Buy to Neutral, setting a price target of INR2,300.00. The decision was influenced by the company’s fourth-quarter performance for the fiscal year 2025, which, while steady, did not provide a compelling growth-to-valuation argument in the near term.
United Breweries reported a revenue increase of approximately 9% year-over-year, supported by a 5% growth in volume and favorable price-mix effects. The company’s premium portfolio continued to perform well, with a 24% year-over-year increase. Gross margin saw a slight improvement, rising 37 basis points to 42.1%, with EBITDA margin also increasing by 139 basis points to 8.0%. This resulted in around a 21% year-over-year growth in profit after tax.
Despite these positive outcomes, the quarter began with challenges, including a complete halt in operations in Karnataka and a partial suspension in Telangana. These disruptions affected United Breweries as Karnataka is its most profitable market, and Telangana is its largest volume contributor.
The company’s gross margins benefited modestly from an improved product mix and cost discipline. However, the reliance on contract manufacturing and ongoing upstream investments have limited the operating leverage. According to DAM Capital, while United Breweries’ management is focused on network optimization, scaling up premium offerings, and preparing for peak seasons, the current growth prospects do not justify the previous stock valuation, especially without the potential for significant margin improvements or double-digit volume growth.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.