United Spirits warns of a tough second half of the year, despite a strong second quarter led by premium brands

Praveen Someshar, chief executive of United Spirits, said a rebound in urban spending and a surge in demand for premium drinks drove sales growth, but the maker of Johnnie Walker and Smirnoff warned that the second half of the fiscal year, typically driven by weddings and festivals, could be more challenging than usual due to continued regulatory disruptions.

“Urban consumer sentiment seems to be recovering and moving forward on the back of the GST reforms which will hopefully increase disposable income, which is good for all categories, especially in the luxury sector. We have ended a strong quarter both top and bottom line. Maharashtra will remain challenging,” Someshwas told analysts, adding that the second half of the fiscal would be “a lot more challenging” due to regulatory headwinds in Maharashtra and Andhra Pradesh, even as the company restructures its value chain to stay exist. competitive.

Despite being the most populous country in the world with over 1.4 billion people, India’s drinking population is estimated at around 300 million people, with almost half of them drinking cheap or unbranded spirits.

The mass premium segment, once a key growth driver in whisky, rum and cognac, is under pressure due to rising costs and local competition.

However, USL’s net profit rose 41% year-on-year to Rs472 crore in the July-September quarter, driven by higher sales of premium brands, favorable pricing and efficiency gains. Sales from the ‘prestige and above’ segment, which includes Johnnie Walker and its own single malt Godawan, increased by 12.4%, accounting for almost 90% of total sales.

Maharashtra sharply hiked excise duties on Indian Made Foreign Liquor (IMFL) in July, leading to a significant increase in retail prices for consumers. Excise duties on domestic spirits and imported premium spirits were also increased, while excise duties on beer and wine remained unchanged. Rival Pernod Ricard also said its net sales grew 3% during the quarter, driven by changes in excise duty policy. “The 50% increase in excise duties from 300% to 450% will lead to a significant increase in consumer prices of around 35%, which will have a consequential impact on demand. Elsewhere, India is seeing strong sales growth, both for Royal Stag and especially for the global brands led by Jameson. We expect the change in excise policy to continue to weigh on our overall sales performance throughout the year, albeit with continued favorable and dynamic underlying trends,” Pernod Ricard CFO Helene de Tissot told investors.

Equitas Small Finance Bank swings to a profit of Rs 24 crore as provisions fall

Sharply lower provisions helped Equitas Small Finance Bank report a return to profitability with a net profit of Rs 24 crore in the second quarter of the fiscal after a net loss of Rs 224 crore in the previous three-month period. Asset quality remained stable.

Net profit was almost double from Rs 13 crore a year ago.

However, operating profit for the period under review was 31% lower at Rs 241 crore, compared to Rs 350 crore, as expenses rose sharply.

The bank’s gross non-performing asset ratio remained stable at 2.92% at the end of September compared to the end of June. Gross NPA stood at 2.95% a year ago.