UBL - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 2.4
| Stock Code | UBL | Market Cap | 39,880 Cr. | Current Price | 1,512 ₹ | High / Low | 2,295 ₹ |
| Stock P/E | 105 | Book Value | 164 ₹ | Dividend Yield | 0.66 % | ROCE | 13.9 % |
| ROE | 10.8 % | Face Value | 1.00 ₹ | DMA 50 | 1,573 ₹ | DMA 200 | 1,770 ₹ |
| Chg in FII Hold | -0.76 % | Chg in DII Hold | 0.77 % | PAT Qtr | 47.0 Cr. | PAT Prev Qtr | 184 Cr. |
| RSI | 49.7 | MACD | -32.0 | Volume | 39,374 | Avg Vol 1Wk | 90,352 |
| Low price | 1,401 ₹ | High price | 2,295 ₹ | PEG Ratio | 13.2 | Debt to equity | 0.18 |
| 52w Index | 12.4 % | Qtr Profit Var | -64.5 % | EPS | 13.8 ₹ | Industry PE | 32.5 |
📊 Analysis: United Breweries Ltd (UBL) is a strong brand in the alcoholic beverages sector, but current valuations are highly stretched. With a P/E of 105 compared to industry average of 32.5, the stock trades at a steep premium. ROE (10.8%) and ROCE (13.9%) are moderate, not justifying such high multiples. PEG ratio of 13.2 signals poor growth-adjusted valuation. Dividend yield at 0.66% is low, limiting income potential. Technicals show weakness with MACD negative (-32.0) and RSI neutral (49.7).
💰 Entry Price Zone: Attractive entry lies between ₹1,400 – ₹1,480, closer to its 52-week low and below DMA50, offering margin of safety.
⏳ Exit / Holding Strategy: If already holding, consider partial exit near ₹1,750 – ₹1,800 (DMA200 resistance zone). Long-term investors should hold only if earnings growth improves, as current quarterly profit decline (-64.5%) raises caution. Holding period should be 5+ years only if profitability stabilizes and valuations normalize.
Positive
- 🍺 Strong brand equity and leadership in premium beer market.
- 📈 Low debt-to-equity (0.18) ensures financial stability.
- 🏦 Domestic institutional investors increased stake (+0.77%).
Limitation
- ⚠️ Extremely high P/E (105) vs industry (32.5).
- 📉 Weak EPS (₹13.8) and poor PEG ratio (13.2).
- 🔻 Declining quarterly profits (PAT down 64.5%).
Company Negative News
- 📉 Quarterly PAT dropped sharply from ₹184 Cr to ₹47 Cr.
- 🚫 FII holding reduced (-0.76%), showing reduced foreign confidence.
Company Positive News
- ✅ DII stake increased (+0.77%), signaling domestic trust.
- 💡 Strong brand positioning and premium product portfolio.
Industry
- 🏭 Alcoholic beverages industry PE ~32.5, much lower than UBL’s valuation.
- 🌍 Sector growth driven by premiumization and rising urban demand.
Conclusion
UBL remains a premium brand but is currently overvalued with weak earnings momentum. Long-term investors should wait for better valuations near ₹1,400–₹1,480 before entry. Existing holders may consider partial exit near ₹1,750–₹1,800 unless profitability improves. The stock requires patience and strict valuation discipline for long-term compounding.
Selva, since you’re benchmarking stocks systematically, would you like me to prepare a peer overlay comparison (UBL vs United Spirits, Radico Khaitan, etc.) with valuation and growth metrics? That would give you a clearer sector rotation view for your basket logic.