By Aditya Raghunath — United Spirits Ltd (NS:) announced its results for Q4 FY21 and it posted a net profit of Rs 167.3 crore for the quarter. Net sales were up 11.6% from the corresponding quarter in 2020 to Rs 2,224 crore. United Spirits stocks closed at Rs 588.2, up 2.7% on Tuesday.

ICICI Securities Ltd (NS:) maintains its ‘add’ rating on the stock with a target price of Rs 650. It said that the company’s EBITDA (earnings before interest, taxes, depreciation and amortization) expanded to 18.5% while its gross margins improved 180 basis points to 43.9% on the back of a superior product and state mix, and a focus on productivity. However, it sees risks to United Spirits’ business from “tax hikes, continued weakness in on-trade due to operating restrictions and a potential ban of spirits in states”.

Motilal Oswal Financial Services Ltd (NS:) is also positive on the stock as it says that this time around, the risks to the business are less severe considering that home deliveries are permitted and there is lower supply chain disruption. The balance sheet is leaner than expected, and it expects sales to bounce back sharply in the next few months. It has a ‘buy’ rating on the stock with a target price of Rs 685.

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