United Spirits

Investment Rationale:

• United Spirits is leading player in Indian Spirits Industry.

• India has Young population and number of youth which coming into legal drinking Age and favorable demographics leads to Key advantage for the USL.

• Company has started Backward Integration to make Glass Bottles in order to reduction of cost which gives Positive impact on Profit Margin.

• Company has diversified its product portfolio in four segments which is Luxury , Premium , Prestige and Popular it means it caters to all Income Level Group.

• Alcohol continuous to be one of the most regulated sectors in industry. When there is hike in Excise duty or indirect taxes, it can pass the increased cost to consumers which enables because of Durable Competitive Advantage.

• San Diego has taken control at USL which gives strength of combined Diageo and USL portfolio of iconic brands which helps to make Position in India and explore the biggest growth opportunities in Industry.

• San Diego has brought various brands like Johnnie Walker, Smirnoff , Captain Morgan, Guinness , Gold Label , Blue Label , Ketel One vodkas , Ciroc which is very difficult for competitors to make Brand and Product like San Diego which gives Moat Advantage to USL.

 

liquor ban is serious issue for alcohol companies.

 

It is looking like serious issue is there because many state are banning liquor. If ban is removed then stock will shoot up.

 

ban may not b removed in near future

 

histroy says, liquor banned has removed within 2 years from any states except Gujarat.

 

Yes