9 November 2020
2QFY21 Results Update | Sector: Consumer
United Breweries
Estimate changes
TP change
Rating change
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
UBBL IN
264
257.7 / 3.4
1356 / 759
-7/-25/-28
709
CMP: INR975
TP: INR820 (-16% )
Sell
Weak results; recovery gradual, unlike peers
United Breweries (UBBL)’s 2Q results were weak – with 48%/42.9% YoY
volume/sales decline and 79%/96.5% YoY EBITDA/PAT decline – although
better than our expectations. These numbers are also starkly below the
~3%/6% volume/sales decline reported by Alcobev peer United Spirits
(UNSP) last week. This once again highlights that the more in-home
consumption dominates, spirits consumption would do better. This trend is
likely to continue over the next few quarters as well.
The stock has been a significant underperformer in the past six months (v/s
Consumer Staples and Discretionary peers) since our Alcobev category
downgrade
note
in May’20. We had indicated in this report that FY20–22
could be ‘lost years’ for the industry from an earnings growth perspective.
We expect 15% CAGR decline in EPS over FY20–22.
Recovery in FY22 could be sharper for UBBL v/s UNSP. This is particularly
attributable to the company losing out on crucial summer season demand
in 1QFY21 and a far weaker performance in 2QFY21 as well. However, this
heavily relies on the premise that there may be no second wave of the
pandemic, which is by no means a certainty. Unprecedented sharp
increases in excise are already significantly affecting profitability.
Furthermore, another round of increases over the next few months cannot
be ruled out given weak state finances, in turn leading to weak cost
absorption. Despite underperformance over the last six months, valuations
appear rich on both P/E (84.1x FY22 EPS) and EV/EBITDA (32.2x FY22
EBITDA) basis. Maintain
Sell.
Standalone net sales declined 42.9% YoY to INR9b
(est. INR8.7b). EBITDA
declined 79% YoY to INR404m (est. INR128m). PBT declined 95% YoY to
INR59m (est. –INR507m). Adj. PAT declined 96.5% YoY to INR40m (est. –
INR507m) in 2QFY20.
Gross margins expanded 20bp YoY to 52.3%
on the back of a better state
mix and price increases.
With higher employee costs (up 440bp YoY) and higher other expenses (up
350bp YoY) as a percentage of sales, standalone EBITDA margins contracted
770bp YoY to 4.5% in 2QFY21 (est. 1.5%).
Sep’20 saw volume decline of 33% YoY v/s 48% decline for the quarter.
October was better than September, albeit not quantified.
West Bengal has reduced excise on beer to pre-COVID levels. Orissa has
partly rolled back its erstwhile excise increase.
Barley costs are 10% lower v/s last year. The outlook for the rest of the year
is likely to be similar. Bottle costs are also not seeing any kind of inflationary
trend.
Financials & Valuations (INR b)
Y/E March
2020 2021E 2022E
Net Sales
65.1 43.0 59.3
Sales Gr. (%)
0.5 -34.0 38.0
EBITDA
8.8
4.1
7.9
Margin (%)
13.5
9.5 13.4
Adj. PAT
4.3
1.3
3.1
Adj. EPS (INR)
16.2
4.9 11.6
EPS Gr. (%)
-24.0 -69.6 135.5
BV/Sh. (INR)
133.1 137.7 144.9
Ratios
RoE (%)
12.8
3.6
8.2
RoCE (%)
12.7
4.3
9.1
Valuations
P/E (x)
60.3 198.1 84.1
P/BV (x)
7.3
7.1
6.7
EV/EBITDA (x)
29.5 62.7 32.2
Shareholding pattern (%)
As On
Sep-20 Jun-20
Promoter
57.7
57.7
DII
25.1
25.1
FII
10.7
10.7
Others
6.5
6.5
FII Includes depository receipts
Sep-19
57.7
21.9
14.6
5.8
Profitability better than expected
Highlights from management commentary
Krishnan Sambamoorthy – Research analyst
(Krishnan.Sambamoorthy@MotilalOswal.com)
Research analyst: Dhairya Dhruv
(Dhairya.Dhruv@MotilalOswal.com)
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 Motilal Oswal Financial Services
United Breweries
Valuation and view
Results were extremely weak on an absolute basis and significantly weaker v/s
Alcobev peer UNSP. However, they were better than our expectations, and the
outlook is gradually getting better. There is no material change to our FY22 EPS
forecasts.
Since our downgrade to Sell as part of our Alcobev downgrade
note,
UBBL’s
underperformance v/s our Discretionary peers universe has been stark in the
past six months. While stock price return for peers averaged at 40%, it stood at
10% for UBBL. The stock has also underperformed the Staples universe.
Furthermore, there are downside risks of (1) another COVID wave affecting
UBBL far more than spirits players such as UNSP due to in-home consumption
demand being higher for the latter; (2) a CCI investigation and possible penalties
continuing to be a significant overhang; and (3) further excise increases, given
the continued perilous condition of state finances.
The outlook is gradually improving, although at a far slower pace v/s other
Discretionary peers (with 33% decline in volumes YoY even in September).
We maintain a 24x Sep’22 EV/EBITDA target multiple (20% discount to peers),
arriving at TP of INR820 (16% downside). Maintain
Sell.
(INR m)
FY21
FY20
FY21E
2Q
3QE
4QE
9,006 12,221 16,665 65,092 42,961
-42.9
-16.0
17.0
0.5
-34.0
4,707
6,477 8,930 33,581 22,479
52.3
53.0
53.6
51.6
52.3
404
1,727 2,906
8,758
4,081
-79.0
-22.0
119.8
-23
-53.4
4.5
14.1
17.4
13.5
9.5
612
700
777
2,851
2,594
60
80
69
287
280
326
40
47
69
427
59
987 2,108
5,689 1,634
18
217
468
1,406
327
31.5
22.0
22.2
24.7
20.0
40
770 1,640
4,279 1,307
-96.5
-28.1
298.2
-24.0
-69.4
0.4
6.3
9.8
6.6
3.0
FY21
Variance
2QE
8,682
3.7%
-45.0
4,428
51.0
128 216.1%
-93.4
1.5
580
105
50
-507
-
0
0.0
-507
-
-144.0
-5.8
Standalone – Quarterly Earnings Model
Y/E March
FY20
1Q
2Q
3Q
4Q
1Q
Net Sales
20,485 15,786 14,548 14,242 5,069
YoY Change (%)
9.8
3.4
0.3 -12.6 -75.3
Gross Profit
10,314 8,225 7,692 7,248 2,365
Margin (%)
50.3
52.1
52.9
50.9
46.7
EBITDA
3,289 1,925 2,215 1,323
-957
YoY Change (%)
-17.8 -39.5 -10.6 -22.8 -129.1
Margins (%)
16.1
12.2
15.2
9.3 -18.9
Depreciation
692
689
736
734
505
Interest
77
88
99
48
72
Other Income
32
19
35
6
14
PBT
2,552 1,167 1,416
547 -1,519
Tax
907
16
346
135
-376
Rate (%)
35.5
1.3
24.4
24.7
24.8
Adj PAT
1,645 1,151 1,070
412 -1,143
YoY Change (%)
-25.9 -29.7
-2.0 -39.4 -169.5
Margins (%)
8.0
7.3
7.4
2.9 -22.5
E: MOFSL Estimates
Key Performance Indicators
Y/E March
1Q
2Y average growth (%)
Sales
EBITDA
PAT
% of Sales
COGS
Employee Expenses
Other Expenses
Depreciation
YoY change (%)
COGS
Employee Expenses
Other Expenses
Other Income
EBIT
10.5
4.0
5.6
49.7
6.0
28.3
3.4
18.8
15.2
15.3
-79.3
-22.9
FY20
2Q
11.4
1.9
22.4
47.9
7.8
32.1
4.4
11.6
15.5
0.9
-48.9
-51.1
3Q
10.6
25.9
64.2
47.1
8.7
28.9
5.1
1.2
23.5
-1.6
68.6
-18.4
4Q
-0.9
-20.3
-32.3
49.1
9.0
32.6
5.2
-13.3
15.3
11.9
-94.3
-45.1
FY21
1Q
-32.7
-73.5
-97.7
53.3
22.7
42.8
10.0
-73.4
-6.5
-62.5
-55.4
-156.3
2Q
-19.7
-59.3
-63.1
47.7
12.2
35.6
6.8
-43.1
-10.8
-44.7
1,624.9
-116.8
9 November 2020
2
 Motilal Oswal Financial Services
United Breweries
Takeaways from investor presentation
The company witnessed MoM recovery in 2QFY21 on the resumption of supplies
in all markets and the gradual lifting of the lockdown by states.
The ‘On-trade’ channel re-opened for the first time in Sept’20 in a number of
states.
The excise burden was reduced in Odisha and Andhra Pradesh. Early October
saw the introduction of a new excise policy for beer in West Bengal, resulting in
lower consumer prices.
While primary volumes were down 48% YoY in 2Q, this still marks a sequential
recovery from 1QFY21 volumes (down 77% YoY). The key markets of Karnataka,
Goa, and Tamil Nadu posted YoY volume growth in September.
Volume recovery in strong beer was faster than in mild beer.
1HFY21 FCF stood at INR950m (v/s –INR2.5b in 1HFY20). The company was able
to reduce its net debt by INR270m and subsequently reduce interest costs by
20% YoY.
Exhibit 1: Volume growth in 2QFY21
Volume growth (%)
All India
North
West
South
East
2QFY21
-48
-32
-37
-55
-59
1HFY21
-64
-54
-63
-67
-76
Source: Company, MOFSL
Exhibit 2: Volume decline of 48% in 2QFY21
UB Volume growth (%)
17.0
16.0
9.0
5.0
6.5
-2.0
-21.0
-48.0
-77.0
Source: MOFSL, Company
Conference call highlights
Outlook and performance highlights
Volume decline is slowing month on month.
Sep’20 witnessed volume decline of 33% YoY v/s 48% decline for the quarter.
October was better than September, albeit not quantified.
State mix, brand mix, and price increases led to sales decline of 43%, lower than
volume decline of 48% YoY. State mix (higher sales from high-realization states)
played the biggest part in driving above-realization growth.
West Bengal has reduced excise on beer to pre-COVID levels. Odisha has partly
rolled back its erstwhile excise increase.
9 November 2020
3
 Motilal Oswal Financial Services
United Breweries
If Bihar witnesses a change in the political regime – possibly leading to the
abolishment of prohibition in the state – the company believes it could resume
supply within the state within 2–3 months once an announcement is made.
On-trade channel recovery has been very gradual.
Channel details
Online sales even in the 2–3 best states are only 5–10%.
No major closure of on-trade sales is seen yet.
Clarifications on financial items
Barley costs are 10% lower than last year. The outlook for the rest of the year is
likely to be similar. Bottle costs are also not seeing any kind of inflationary trend.
Other income saw a one-off increase due to the reversal of provisions for
doubtful debts.
Capex is estimated to be ~INR2b for the full year.
Valuation and view
Significant improvement in profitability and returns in the last 10 years
UBBL has done well to grow market share from the early 50s to mid-50s in the
decade ending FY20, amid a highly competitive environment.
At the same time, the company has significantly improved profitability and ROCE
over the past decade. Net margins increased to 6.6% in FY20 from 3.9% in FY10;
ROCE increased from below 9% to ~13% in FY20 (despite being depressed by
weak volume growth and the COVID-19 impact in FY20).
Premiumization, better utilization of capacity, the recycling of bottles enabled
by embossment, the localized sourcing of barley, and reduced competitive
intensity in recent years have enabled margin and ROCE improvement.
Over the past decade, sales have grown at an ~11% CAGR, and EBITDA and PAT
at a ~13% and ~17% CAGR, respectively. The past five-year track record is less
impressive at a ~7% CAGR each for sales and EBITDA and 10.5% for PAT.
However, the last three years have reported 11%/9%/23% growth in
sales/EBITDA/PAT CAGR despite a weak FY20.
Business is secured with several moats
Large brewing capacity:
UBBL has 21 owned and eight contract breweries across
India, more than 2x that of the next largest player. This is a huge advantage in a
capital-intensive business and a country where interstate import duty is high.
Widest distribution network:
UBBL has the widest distribution among beer
players, by far, at ~80k outlets.
Brand and maintaining relevance:
In a media-dark country, the incumbent
leader has the natural advantage. Moreover, beer consumption worldwide has a
healthy share of local brands. UBBL’s ‘Kingfisher’ is well-placed in this context.
The company has also successfully kept the brand relevant through clever
marketing.
9 November 2020
4
 Motilal Oswal Financial Services
United Breweries
Our view on the stock
Results were extremely weak on an absolute basis and significantly weaker v/s
Alcobev peer UNSP. However, they were better than our expectations, and the
outlook is gradually getting better. There is no material change to our FY22 EPS
forecasts.
Since our downgrade to Sell as part of our Alcobev downgrade note, UBBL’s
underperformance v/s our Discretionary peers universe has been stark in the
past six months. While stock price return for peers averaged at 40%, it stood at
10% for UBBL. The stock has also underperformed the Staples universe.
Furthermore, there are downside risks of (1) another COVID wave affecting
UBBL far more than spirits players such as UNSP due to in-home consumption
demand being higher for the latter; (2) a CCI investigation and possible penalties
continuing to be a significant overhang; and (3) further excise increases, given
the continued perilous condition of state finances.
The outlook is gradually improving, although at a far slower pace v/s other
Discretionary peers (with 33% decline in volumes YoY even in September).
We maintain a 24x Sep’22 EV/EBITDA target multiple (20% discount to peers),
arriving at TP of INR820 (16% downside). Maintain
Sell.
Exhibit 3: We raise our PAT forecasts for FY22 by 5.9%
New
INR m
FY21E
FY22E
FY21E
Total Income
42,961
59,286
41,138
EBITDA
4,081
7,944
3,026
Adj. PAT
1,301
3,065
37
*very high as we had sharply cut the estimate previously
Old
FY22E
57,594
8,006
2,895
% Change
FY21E
FY22E
4.4%
2.9%
34.9%
-0.8%
*
5.9%
Source: Company, MOFSL
Exhibit 4: UBBL P/E (x)
P/E (x)
Min (x)
190.0
Avg (x)
+1SD
Max (x)
-1SD
Exhibit 5: Consumer sector P/E (x)
P/E (x)
Min (x)
51.0
Avg (x)
+1SD
Max (x)
-1SD
172.0
42.3
41.0
47.8
140.0
101.1
90.0
143.6
79.0
56.8
44.5
31.0
36.5
30.7
25.1
40.8
40.0
21.0
Source: Company, MOFSL
Source: Company, MOFSL
9 November 2020
5
 Motilal Oswal Financial Services
United Breweries
Financials and valuations
Consolidated – Income Statement
Y/E March
Total Income from Operations
Change (%)
Raw Materials
% of Sales
Gross Profit
Margin (%)
Total Expenditure
% of Sales
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income
PBT bef. EO Exp.
EO Items
PBT after EO Exp.
Total Tax
Tax Rate (%)
Less: Minority Interest
Adjusted PAT
Change (%)
Margin (%)
Consolidated – Balance Sheet
Y/E March
Equity Share Capital
Total Reserves
Net Worth
Minority Interest
Deferred Tax Liabilities
Total Loans
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Goodwill on Consolidation
Capital WIP
Total Investments
Curr. Assets, Loans&Adv.
Inventory
Account Receivables
Cash and Bank Balance
Loans and Advances
Curr. Liability & Prov.
Account Payables
Provisions
Net Current Assets
Appl. of Funds
E: MOFSL Estimates
FY16
48,408
3.0
21,209
43.8
27,198
56.2
41,402
85.5
7,006
14.5
2,436
4,569
787
764
4,547
0
4,547
1,560
34.3
4
2,983
14.8
6.2
2,982.8
FY16
264
21,207
21,471
25
634
8,062
30,193
33,084
15,104
17,980
242
608
1
24,827
6,881
11,189
140
6,618
13,466
4,176
9,291
11,361
30,193
FY17
47,603
-1.7
21,779
45.8
25,823
54.2
40,871
85.9
6,732
14.1
2,871
3,861
560
180
3,481
0
3,481
1,182
34.0
4
2,296
-23.0
4.8
2,295.4
FY17
264.4
23,078
23,342
28
470
5,940
29,780
35,089
17,827
17,262
242
1,372
1
25,911
7,508
12,954
243
5,205
15,007
4,596
10,412
10,903
29,780
FY18
56,196
18.1
26,315
46.8
29,881
53.2
47,170
83.9
9,025
16.1
2,597
6,429
456
105
6,078
0
6,078
2,132
35.1
4
3,942
71.7
7.0
3,944.3
FY18
264
26,638
26,903
29
182
3,121
30,235
37,208
20,152
17,056
242
723
2
29,212
8,080
14,986
242
5,904
16,999
5,217
11,782
12,212
30,235
FY19
64,754
15.2
30,077
46.4
34,678
53.6
53,371
82.4
11,384
17.6
2,599
8,785
239
247
8,793
0
8,793
3,160
35.9
4
5,629
42.8
8.7
3,077.6
FY19
265
31,572
31,838
30
114
2,115
34,097
39,954
22,425
17,529
242
1,899
3
34,171
10,325
15,110
462
8,275
19,747
5,902
13,845
14,424
34,097
FY20
65,092
0.5
31,511
48.4
33,581
51.6
56,334
86.5
8,758
13.5
2,851
5,907
287
69
5,689
0
5,689
1,406
24.7
6
4,277
-24.0
6.6
0.0
FY20
266
34,936
35,203
33
0
1,691
36,927
45,077
26,058
19,019
242
1,991
3
34,254
10,939
13,504
786
9,025
18,582
5,450
13,131
15,672
36,927
FY21E
42,961
-34.0
20,482
47.7
22,479
52.3
38,880
90.5
4,081
9.5
2,594
1,487
280
427
1,634
0
1,634
327
20.0
6
1,301
-69.6
3.0
-0.3
FY21E
266
36,137
36,403
33
0
-1,310
35,127
47,577
28,653
18,924
242
1,148
3
31,786
8,599
12,390
418
10,378
16,976
6,320
10,657
14,810
35,127
(INR m)
FY22E
59,286
38.0
28,061
47.3
31,225
52.7
51,342
86.6
7,944
13.4
3,662
4,282
305
128
4,105
0
4,105
1,035
25.2
6
3,065
135.5
5.2
(INR m)
FY22E
266
38,034
38,301
33
0
-810
37,524
50,077
32,315
17,762
242
1,148
3
37,864
10,892
15,222
852
10,897
19,495
4,076
15,419
18,369
37,524
9 November 2020
6
 Motilal Oswal Financial Services
United Breweries
Financials and valuations
Ratios
Y/E March
Basic (INR)
EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
Return Ratios (%)
RoE
RoCE
RoIC
Working Capital Ratios
Asset Turnover (x)
Inventory (Days)
Debtor (Days)
Creditor (Days)
Leverage Ratio (x)
Debt/Equity
Consolidated – Cash Flow Statement
Y/E March
OP/(Loss) before Tax
Depreciation
Interest & Finance Charges
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
Others
CF from Operating incl EO
(Inc)/Dec in FA
Free Cash Flow
Others
CF from Investments
Inc/(Dec) in Debt
Interest Paid
Dividend Paid
Others
CF from Fin. Activity
Inc/Dec of Cash
Opening Balance
Cash eqv
Closing Balance
E: MOFSL Estimates
FY16
11.3
81.2
1.2
10.2
86.4
47.6
12.0
5.5
37.9
0.1
14.8
12.1
10.5
1.6
49
77
30
0.4
FY17
8.7
88.3
1.2
13.2
112.3
49.9
11.0
5.5
39.1
0.1
10.2
9.1
8.9
1.6
55
93
34
0.3
FY18
14.9
101.7
2.0
13.4
65.4
39.4
9.6
4.6
28.9
0.2
15.7
14.3
14.5
1.9
51
91
32
0.1
FY19
21.3
120.4
2.5
11.7
45.8
31.3
8.1
4.0
22.8
0.3
19.2
18.1
18.5
1.9
52
85
31
0.1
FY20
16.2
133.1
2.5
15.5
60.3
36.2
7.3
4.0
29.5
0.3
12.8
12.7
13.5
1.8
60
80
32
0.0
FY21E
4.9
137.7
0.0
0.0
198.1
66.2
7.1
6.0
62.7
0.0
3.6
4.3
3.5
1.2
83
110
50
0.0
FY22E
11.6
144.9
3.5
30.0
84.1
38.3
6.7
4.3
32.2
0.4
8.2
9.1
9.3
1.6
60
85
32
0.0
(INR m)
FY22E
4,105
3,662
305
-776
-3,400
3,897
0
3,897
-2,480
1,417
0
-2,480
500
-305
-1,178
-2,185
-3,168
-1,751
55
2,548
852
FY16
4,547
2,436
755
-1,595
-777
5,365
441
5,806
-2,430
3,376
-24
-2,455
-1,857
-794
-317
0
-2,968
383
62
-305
140
FY17
3,481
2,871
581
-1,435
22
5,519
-78
5,441
-2,355
3,086
15
-2,340
-2,122
-583
-307
0
-3,012
89
34
120
243
FY18
6,078
2,597
471
-2,534
-1,265
5,346
287
5,633
-2,014
3,619
-45
-2,060
-2,820
-507
-308
1
-3,634
-61
126
177
242
FY19
8,793
2,599
306
-3,898
-1,101
6,699
-214
6,485
-4,366
2,119
-25
-4,392
-1,006
-313
-640
-21
-1,980
114
154
114
381
FY20
5,689
2,851
305
-1,903
-2,196
4,746
332
5,078
-4,033
1,045
5
-4,028
115
-268
-800
252
-700
350
321
115
786
FY21E
1,634
2,594
280
-245
1,230
5,494
0
5,494
-2,480
3,014
0
-2,480
-3,000
-280
-102
7,461
4,079
7,093
423
-7,098
418
9 November 2020
7
 Motilal Oswal Financial Services
United Breweries
NOTES
9 November 2020
8
 Motilal Oswal Financial Services
United Breweries
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial
products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are
available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a
registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and
National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National
Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance
Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are
available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report
should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific
merchant banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the
website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated
from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability
or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong
Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers
Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any
brokerage and investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is
intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as
"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which
this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration
provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange
Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-
dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this
chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL
in respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”,
of which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the
SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and
inform MOCMSPL.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
9 November 2020
9
 Motilal Oswal Financial Services
United Breweries
********************************************************************************************************************************
The associates of MOFSL may have:
- financial interest in the subject company
- actual/beneficial ownership of 1% or more securities in the subject company
- received compensation/other benefits from the subject company in the past 12 months
- other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the
company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)
- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent
of MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in
nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or
distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for
informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing
in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.
The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this
document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this
document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views
expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade
securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of
the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and
should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make
modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from
time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to
perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of
information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or
may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,
directly or indirectly, to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or
entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law,
regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in
all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.
Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost
revenue or lost profits that may arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its
affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such
misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person
accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;
Website
www.motilaloswal.com.CIN
no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth
Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is
a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.
Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.
Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no
assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance
Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
9 November 2020
10