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Investing.com -- Carlsberg A/S (CSE:CARLb) is exploring a potential listing of its Indian operations, but analysts expect the financial impact to be modest despite the business’s growth and high valuations in the local market.
The brewer has begun talks with potential advisers about an initial public offering of its India unit, which contributes about 4% of group EBIT.
Based on peer comparisons, UBS estimates the subsidiary could be worth between DKK 21 billion and DKK 27 billion, equivalent to roughly 21% to 26% of Carlsberg’s market capitalization.
“We estimate Carlsberg India could be valued at DKK 21-27bn (base case DKK 24bn),” UBS analysts said, noting the calculation assumes a 45x EV/EBIT multiple in line with United Breweries.
Indian beverage companies command premium valuations. United Spirits trades at 40x EV/EBIT versus Diageo’s 13x, United Breweries at 38x against Heineken’s 11x, and Radico Khaitan at 44x compared with European peers trading closer to 13x.
In contrast, Carlsberg as a group currently trades on 12x price-to-earnings and 13x EV/EBIT.
Despite the potential valuation uplift, analysts caution the benefits for shareholders could be limited.
“However, we don’t expect Carlsberg to benefit from any re-rating in the event of an IPO of the India business,” the brokerage said, citing the lack of positive share-price impact when the company listed its Asia operations in 2019, as well as muted responses for rivals Heineken and Diageo with their Indian units.
One tangible benefit could come from debt reduction. Carlsberg is projected to end fiscal 2025 at 3.33x net debt to EBITDA, with a target of less than 2.5x.
UBS calculates that each 10% stake sold in the Indian business could lower the ratio by about 0.12x. Still, analysts warn that using “a crown jewel asset for the purpose of just de-leveraging could be perceived by the market that organic deleveraging to the target is not on track.”
The India operations have delivered strong growth in recent years. Volumes rose an average of 12% per quarter over the past two and a half years, powered by the Tuborg and Carlsberg brands.
The company holds the No. 2 position in the Indian beer market behind United Breweries. In the second quarter of 2024, Carlsberg bought out its joint-venture partner, removing investment constraints, particularly around brewing capacity and marketing.
UBS said this “removing several constraints for further investment” ahead of its planned capacity expansion by 2026.
Carlsberg’s overall financial guidance shows stable profitability. Group EBIT margins are forecast at 14.6% in 2025, rising to 15.6% in 2027.
Net sales in India are expected to reach DKK 3.5 billion in 2026 with an EBIT margin of 15%, generating about DKK 531 million in operating profit.
UBS maintained a neutral rating on Carlsberg, with a 12-month price target of DKr 810, compared with the stock’s DKr 770 close on Sept. 12, 2025.
“An IPO could help slightly accelerate de-leveraging,” the analysts said, but they added that the move is unlikely to materially change the group’s valuation profile.