UBL - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 2.6

🍺 Fundamental Analysis of United Breweries Ltd (UBL)

✅ Strengths

Brand Power & Market Position

UBL is a dominant player in India’s beer segment, backed by Heineken

Strong distribution and brand recall (Kingfisher, Heineken)

Financial Stability

Debt-to-Equity: 0.14 — low leverage, healthy balance sheet

ROCE: 13.9% and ROE: 10.8% — decent efficiency for a consumer discretionary stock

Earnings Recovery

PAT Qtr: ₹184 Cr vs ₹97.6 Cr — sequential improvement

EPS: ₹17.1 — improving, but still modest

⚠️ Concerns

Valuation Excess

P/E: 112 vs Industry PE: 32.9 — extremely overvalued

PEG Ratio: 14.1 — suggests growth is overpriced

Book Value: ₹165 vs Price: ₹1,976 — ~12x book, premium valuation

Weak Dividend Yield: 0.51% — not attractive for income investors

Technical Neutrality

RSI: 44.8 — neutral zone

MACD: 3.87 — weak bullish momentum

Price hovering near DMA 50 & 200 — no strong trend confirmation

Institutional Sentiment Mixed

FII Hold ↓ 0.19%

DII Hold ↑ 0.20% — cautious stance

52w Index: 33.8% — significant underperformance from 52-week high

📉 Ideal Entry Price Zone

Entry Zone: ₹1,850–₹1,900

Near recent low and offers better valuation comfort

RSI support and potential reversal zone

🧭 Long-Term Investment Outlook

UBL is not an ideal long-term investment at current levels due to its excessive valuation and modest growth metrics. While the brand is strong and the balance sheet is clean, the stock is priced for perfection without delivering high growth.

Holding Period: 12–18 months

Reassess if ROE improves to 15%+ and PEG drops below 2.0

Monitor volume growth and margin expansion post festive and summer seasons

🚪 Exit Strategy (If Already Holding)

Partial Exit Zone: ₹2,250–₹2,300

Near 52-week high and valuation ceiling

Full Exit

If ROE stagnates below 10% for 2+ quarters

If PEG ratio remains above 10 and earnings growth slows

If price breaks below ₹1,800 and fails to recover

Reinvest: Only if price corrects to ₹1,750–₹1,850 and valuation becomes reasonable

Would you like a comparison with peers like Radico Khaitan or AB InBev India to explore better beverage sector plays with stronger growth potential?

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