UBL Q1 FY27 earnings call.
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Revenue
₹3,067 Cr
verified against source
Revenue YoY
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EBITDA
Pending
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What the record says.
United Breweries delivered a resilient Q1 FY27 navigating significant cost headwinds from Middle East supply chain disruptions, which impacted gross margins by an estimated 300bps, partially offset by a 150 crore recovery program. The company reduced in-market inventory by ~20% to strengthen cash flow, resulting in sell-in of 9% versus industry sellout of 13%. Premium portfolio reached an inflection point—becoming accretive to margins for the first time—driven by localization efforts and trade spend optimization. Pricing interventions implemented across 22 states (2.5-3% weighted average) are expected to support margins going forward. Karnataka's ABV-based tax reforms are driving 30-50% category growth, validating beer as a differentiated category. Key risks include persistent input cost inflation and state-level pricing negotiations in unviable markets like Haryana where trade discounts were reduced. Management maintained double-digit revenue growth ambition for FY27, with premium targeted to reach 20% of revenue mix.
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Guidance to track
- Management reaffirmed ambition for double-digit revenue growth with high single-digit volume growth, balanced by profitability focus and premium mix improvement.
- Company targeting premium segment to grow from current 10-11% to 20% of total revenue, supported by localization and brand strength.
- Earlier guidance of 400-500bps impact from Middle East conflict revised downward to 350-400bps, reflecting successful recovery program execution and pricing actions.
- Management announced plans to host a capital markets day in early September to provide deeper insights on industry dynamics, reforms impact, and company positioning.
Risks flagged
- Middle East conflict continues to create substantial pressure on packaging, logistics, and foreign exchange. Full-year impact revised to 350-400bps but remains elevated near-term.
- Large multinational competitor with IPO-related valuation targets increasing trade investment in certain markets. Management noted impact in Haryana where trade discounts were significantly reduced.
- Several states like Haryana and West Bengal remain economically unviable for investment due to low EDPs and high taxes, limiting volume recovery despite strong category growth elsewhere.
- Despite Q1 acceleration to 13% category growth driven by reforms, core seasonality risk remains. Seven-year average of ~6% suggests reforms alone may not fully offset weather volatility.
Key quotes
- Premium margins have become accretive for the first time in the past quarter. And we believe this is structural and the premium portfolio will continue their upward trajectory to become a mutable contributor to profitability for UBL in the future.
- The Karnataka move is a revolutionary move and we have been seeing that category is now growing higher of 30-35% in Karnataka and in some months in recent months is actually up more than 50%.
- The impact on the margins and the cost because of the war impact and the data is absolutely clear that the state where EDPs are very low, we actually don't make money and it's very difficult for us to invest the money in pushing the product.
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