UBL - United Breweries

📊 NSE: UBL 🏢 Breweries & Distilleries 📅 Last Updated: 12/14/2025 14:44

💰 Financial Performance

Revenue Growth by Segment

Total revenue grew 9.8% YoY in FY2025 to INR 8,915.1 Cr. Q1 FY2026 saw a robust 15.7% growth, while H1 FY2026 moderated to 7.1% YoY due to monsoon impacts and excise duty hikes in key markets like Karnataka. Segment-specific growth percentages are not disclosed.

Geographic Revenue Split

Not disclosed in available documents, though Karnataka is identified as a key high-profit market generating relatively higher profits than the country average.

Profitability Margins

Gross margin for Q2 FY2026 was 42.8%. Operating Profit Margin (OPM) improved from 8.6% in FY2024 to 9.4% in FY2025 due to benign input costs and premiumization. However, OPM contracted to 9.0% in H1 FY2026 from 11.2% in H1 FY2025 due to volume declines in Karnataka.

EBITDA Margin

OPBDIT/OI (EBITDA Margin) was 9.4% in FY2025, an 80 bps improvement YoY. EBIT for H1 FY2026 declined by 18% due to increased brand investments and temporary deleverage from lower volumes.

Capital Expenditure

Planned capex of INR 700-750 Cr in FY2026 and INR 750-900 Cr in FY2027 for a greenfield facility in Uttar Pradesh, capacity expansion, and visi cooler footprint growth.

Credit Rating & Borrowing

Ratings reaffirmed at [ICRA]AA+(Stable) and [ICRA]A1+. Total debt/OPBDIT stood at 0.74x as of March 31, 2025, and rose to 0.9x by September 30, 2025. Interest coverage was 65.4x in FY2025.

⚙️ Operational Drivers

Raw Materials

Raw materials and input costs (including barley and glass bottles implied by industry context) are described as highly volatile, impacting margins because pricing is regulated by state governments.

Capacity Expansion

UBL owns 19 breweries and has 16 contract brewing arrangements. Planned expansion includes a greenfield facility in Uttar Pradesh to increase manufacturing footprint by FY2027.

Raw Material Costs

Input costs were benign in FY2025, supporting margin expansion, but remain a key monitorable due to lack of immediate pricing flexibility to pass on cost increases to consumers.

📈 Strategic Growth

Expected Growth Rate

9.80%

Growth Strategy

Growth will be achieved through premiumization (faster growth in premium products), capacity expansion (INR 1,500 Cr+ capex over two years), and increasing the visi cooler base to improve secondary sales and market reach.

Products & Services

Beer products including strong, premium, and ultra-premium variants.

Brand Portfolio

Kingfisher Premium, Kingfisher Strong, Kingfisher Ultra, Heineken, Heineken Silver, Bullet, Hunter, LP, and Kalyani Black Label.

New Products/Services

Product innovations and premium brand launches are expected to continue supporting margins, though specific revenue contribution percentages for new launches are not disclosed.

Market Expansion

Setting up a greenfield facility in Uttar Pradesh and expanding capacity in states where demand exceeds current supply.

Market Share & Ranking

UBL commands a strong market share in the domestic beer market, though it faces increasing competition from international and domestic craft players.

Strategic Alliances

UBL is a 61.52% subsidiary of Heineken NV and maintains 16 contract brewing arrangements to provide manufacturing flexibility.

🌍 External Factors

Industry Trends

The industry is evolving toward premiumization and craft beer. India has low per-capita beer consumption compared to global averages, suggesting long-term growth potential.

Competitive Landscape

Intense competition from large international players and a rising number of microbreweries and craft beer brands in major metros.

Competitive Moat

Moat is sustained by strong brand equity (Kingfisher), a pan-India manufacturing footprint (19 owned breweries), and exceptional financial flexibility from parent Heineken NV.

Macro Economic Sensitivity

Vulnerable to macroeconomic events such as demonetization, general economic slowdowns, and pandemic-related disruptions.

Consumer Behavior

Shift toward premium products and increasing beer options available to domestic consumers in metros.

⚖️ Regulatory & Governance

Industry Regulations

Extensive government control, including a ban on advertising in mass media and state-specific pricing/distribution policies.

Environmental Compliance

Environmental risks involve handling effluents and water usage, though specific compliance costs are not disclosed.

Taxation Policy Impact

Highly regulated tax structures; excise duty hikes (e.g., Karnataka in H1 FY2026) directly impact volume and profitability.

Legal Contingencies

Competition Commission of India (CCI) order directing UBL to pay INR 751.8 Cr for alleged anti-competitive practices; the matter is currently being contested.

⚠️ Risk Analysis

Key Uncertainties

Unfavorable policy changes in key states and volatility in raw material prices could impact margins by more than 200 bps, as seen in the H1 FY2026 margin contraction.