United Spirits S/L net sales were up 13% y-o-y to R22.8b (est. of R23.3 billion). Gross sales grew 11% y-o-y to R56 billion, excise duty declined 70bp y-o-y (down 120bp q-o-q, primarily due to mix benefit).
For the quarter, Diageo brand portfolio contributed Rs 2.37 billion to revenues. Excluding that, revenues were flattish at Rs 20.5 billion vs Rs 20.2 billion in Q4FY15. Recurring EBITDA after adjusting for accounting reclassification of certain prior period transactions (160bp impact) and certain one off items and provisions (220bp impact) stood at Rs 1.7 billion (est. Rs 2.56 billion), a growth of 30% y-o-y on a low base vs. the reported EBITDA of Rs 844 million, a decline of 36% y-o-y. Adjusted PAT was flat y-o-y at Rs 931 million (est. of Rs 1.1 billion).
Overall Q4FY16 volumes declined 4% to 23.3 million cases, Popular Segment declined 10% while Prestige and above segment volumes were up 9% y-o-y (Net sales of Prestige and above portfolio grew 29% y-o-y). Diageo contributed 0.4 million cases to the Q4 volumes. Excluding Diageo, volumes were down 5.8% to 22.9 million cases – Prestige & above volumes up 4%.
While we present the y-o-y margin comparison, it is academic as base quarter had several one-offs relating to gross margins and staff costs. We will stick to q-o-q margin analysis, with its attendant pitfalls (product mix is different) for the current quarter. Q4FY15 gross margins had one offs and it stood at 46.3% (highest since Q2FY11). Lower Staff costs (down 240 bp y-o-y and 10 bp q-o-q to 6.5%).