🧾 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
| Metric | FY20 | FY25 | 5-Yr Change |
|---|---|---|---|
| Revenue (₹ Cr) | 6,509 | 8,915 | +37% |
| Net Profit (₹ Cr) | 428 | 442 | +3.3% 😳 |
| EBITDA Margin | 13.5% | 9.4% | ↓ Massive Drop |
| ROCE (%) | 17% | 14% | 🔻 |
| Operating Cash Flow (₹ Cr) | 508 | 235 | ↓ 54% |
🫣 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.
| Quarter | Revenue (₹ Cr) | OPM (%) | Net Profit (₹ Cr) |
|---|---|---|---|
| Mar ’23 | 1,766 | 3% | 10 |
| Jun ’23 | 2,275 | 10% | 136 |
| Sep ’23 | 1,890 | 10% | 107 |
| Mar ’25 | 2,323 | 8% | 98 |
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
| Metric | Value |
|---|---|
| CMP (Jun 2025) | ₹1,953 |
| 5-Yr High/Low | ₹2,300 / ₹1,810 |
| 5-Year Return | ~14% |
| P/E Ratio | 112x 🫨 |
| P/B Ratio | 11.8x 😅 |
| Dividend Yield | 0.51% |
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
