🧾 At a Glance

India’s beer behemoth United Breweries (UBL) sells 1 out of every 2 beers consumed in the country. But investors? They’re sipping diluted returns. Sales grew 53% in 5 years, profit just 20%, and margins? As flat as yesterday’s beer. Still, the stock trades at a frothy 112x P/E. Time to sober up?

🍻 1. Business Model: Brew It and Boo It

UBL’s business model is refreshingly simple:

• Brew beer
• Slap a Kingfisher label
• Sell at bars, kirana shops, and IPL ads

🏷️ Brand Portfolio:

• Flagship: Kingfisher Premium, Kingfisher Ultra, Kingfisher Strong
• Premium imports: Heineken (global brand, same brewery)
• Legacy: London Pilsner, UB Export Lager, Zing

It operates over 20 breweries, recently expanding capacity in Andhra Pradesh and Nanjangud.

📊 2. Financial Performance: Buzzed but Not Booming

🫣 OPM collapsed from 18% in FY19 to just 9% in FY25. Blame it on:

• Skyrocketing glass, barley, and energy costs
• Beer price caps by state governments
• Increase in excise duties without pricing power

🧠 3. Ownership & Leadership: The Dutch Took Over

• Promoter Holding: 70.84% (Heineken NV, Netherlands 🇳🇱)
• Public Shareholding: Down to just 4.9% — almost as rare as a beer discount in Kerala
• Chairman: Rishi Pardal (ex-Marico, ex-HUL)
• Strategy: Shift from mass beer to premiumization + operational efficiency

🧂But results have been… foamy.

Despite global Heineken expertise, local regulatory bottlenecks and input cost inflation continue to hit profitability.

🧮 4. The Quarterly Hangover

Let’s decode the last few quarters.

Yes, there’s seasonal recovery in summer. But YoY margins remain in stagflation mode. Revenue is flowing, but profit is… hungover.

📉 5. The Stock: Premium Brew, Premium Valuation

Even after margin compression and profit stagnation, the stock is trading like it owns all of Oktoberfest.

📊 Peer Comparison:

• Radico Khaitan – P/E 103x, but growing faster with better margins
• United Spirits – P/E 65x, with 28.6% ROCE (double UBL)
• UBL – P/E 112x, OPM 9%, ROCE 13.9%

Either the market sees a turnaround ahead… or it’s just drunk.

🎯 6. Fair Value: What’s the sober price?

• FY25 EPS: ₹16.7
• Let’s be generous and assume a 40–45x P/E for the premium brand and market leadership
• That gives a fair value range of:

💰 Fair Value = ₹670 to ₹750

Current price of ₹1,950 = 3X FV = you’re paying Château Margaux price for an Old Monk sip.

🧨 7. Risks & Red Flags

• ❌ No pricing control in most Indian states
• ❌ Regulatory risks (GST raids, brewery closures like Mangalore)
• ❌ Margins consistently below peers
• ❌ Expensive even by luxury alcohol standards

Even revenue growth is getting expensive: Sales CAGR of just 6% over 5 years — you’re basically paying ₹1000 for ₹6 growth.

🧲 8. EduInvestor Verdict: Cheers to Caution

UBL is not a bad company. It’s the undisputed beer king of India. But as an investment, it’s the guy at the party who shows up in a tuxedo and expects you to split his ₹1,500 cover charge.

• ✅ Brand moat? Absolutely.
• ✅ Distribution? Nationwide.
• ✅ Profit growth? Flatline.
• ❌ Valuation? Bubble.

Unless margins spike or Heineken executes a genius pivot, this stock is more “hold my beer” than “buy more beer”.

🍻 Tags

United Breweries, Kingfisher beer stock, Heineken India, alcohol stocks India, UBL 5-year performance, high P/E FMCG stocks, United Breweries analysis, beer industry India, brewery stocks, EduInvesting stock roast, overpriced Nifty 500 stock, fair value United Breweries, dividend-paying consumer stocks

✍️ Written by Prashant | 📅 June 20, 2025