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United Spirits gains 4%; Edelweiss retains buy as liquor stocks have better moat than most staples

November 22
16:05 2017
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Edelweiss has maintained its buy call on United Spirits with a price target of Rs 3,710, implying a potential upside of nearly 16 percent from Tuesday’s closing price. The stock price rallied nearly 4 percent to hit a fresh 52-week high of Rs 3,328 per share intraday on Wednesday.

The research house believes liquor stocks have better moat than most staples.

United Spirits is well placed on the back of price hikes, soft input prices, improving business sanity and compliance, Edelweiss feels.

The company is moving towards franchisee model to ensure margin stability in popular segment, it said.

The research house expects EPS to grow at CAGR of 45.5 percent over FY17-19 aided by 324 bps margin improvement and balance sheet de-leveraging.

Positives are recovery in urban growth, GDP revival, low per capita consumption, favourable demographics and steady conversion from country liquor to IMFL, Edelweiss said.

At 15:22 hours IST, the stock price was quoting at Rs 3,305.50, up Rs 101.00, or 3.15 percent on the BSE.

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