United Spirits Q3 earnings preview: Here's what to expect

United Spirits (USL) is set to release its results for October-December quarter of the financial year 2019-20 today. A CNBC TV18 poll expects Q3 to be a muted quarter for USL on the back of weak demand, liquidity concerns and protest-led disruptions in certain states.

In Q2 volume, the growth was absolutely flat and this time as well, the street is expecting muted volume growth of just 5 percent.

Apart from that, revenues are likely to inch up by just 4 percent but operating margins are likely to improve at 14 percent on lower expenses like employee cost and ad-expenses. However, gross margins are likely to decline on an increase in raw material prices.

Lower tax rates should benefit overall profits. It will be important to watch out for management comments on future outlooks especially on the raw material prices, volumes and margins.

The stock performance is absolutely flat in last one year, the stock trades at a slight discount to its peer but at expensive valuations of 38 times FY21 expected earnings.

-Earnings to remain muted on weak demand, liquidity challenges

-Protest-led disruptions in some states to impact volumes

-Expect muted volume growth of 5% for Prestige & Above segment

-Revenue seen (GU)4.42% at `2,611.36 cr vs `2,500.9 cr

-EBITDA seen (GU)11.71% at `388.5 cr vs `347.8 cr

-Margins seen (GU) at 14.8% vs 13.9%

-Gross margins expected to decline on higher raw material prices

-EBITDA margins will be supported by lower employee and ad expenses

-Profit After Tax seen (GU)14.57% at `243.5 cr vs `212.6 cr

-Outlook on raw material prices

-Volume growth and margin trend