IDirect UnitedBreweries IC

Initiating Coverage
December 23, 2014
United Breweries
Rating matrix
Rating
Buy
Target
| 950
Target Period
| 814
Heineken brews heady growth!!!
12-15 months
Potential Upside
17%
YoY Growth (%)

FY14
Net Sales
FY15E
FY16E
FY17E
8.5
19.1
20.6
18.1
EBITDA
23.3
20.1
24.0
20.4
Net Profit
31.3
35.2
33.7
27.6
EPS
31.3
35.2
33.7
27.6
Valuation summary
PE(x)
Target PE(x)
EV to EBITDA(x)
FY14
FY15E
FY16E
FY17E
95.0
72.8
54.5
42.7
102.7
76.0
56.8
44.5
38.0
32.6
26.4
21.7
Price to Book (x)
12.6
11.3
9.9
8.2
RoNW (%)
13.2
15.5
18.1
19.2
RoCE (%)
14.3
17.1
19.8
21.5
Stock data
Bloomberg/Reuters
UBBL:IN/ UBBW.NS
Market Cap (| cr)
21469.28
Debt FY14 (| cr)
1016.49
Cash FY14 (| cr)
142.61
EV (| cr)
22343.16
52 week H/L (|)
1006/615
Equity Capital (| Cr)
26.44
Price movement
9,000
1,500
8,000
1,200
7,000
6,000
900
5,000
4,000
600
3,000
300
2,000
Jan-12
Oct-12
Jul-13
UBL (R.H.S)
Mar-14
Dec-14
Nifty (L.H.S)
United Breweries (UBL), the market leader in the Indian beer market with
~51% market share, is well poised to benefit from the unprecedented
opportunity arising from the impending growth in per capita consumption
and an ever enlarging base of population in the legal drinking age. The
company is equipped with a strong portfolio of brands and the largest
distribution network in India, which is difficult to emulate for new global
brands entering the Indian market. Further, with a leaner organisation
structure and higher operational control in the hands of global major
Heineken, the financials are expected to see a gradual improvement. We
expect revenue and PAT to grow at a CAGR of 19.5% and 32.5%,
respectively, with RoE and RoCE improving from 13.2% and 14.3% to
19.3% and 21.6%, respectively, over FY14-17E.
Nascent market provides huge growth potential
The Indian beer market has grown at a CAGR of 8% over FY10-14. Per
capita consumption of beer in India remains low at 1.9 litre compared to
64.5 litre, 76.1 litre and 34.5 litre in Brazil, Russia and China, respectively.
Favourable demographics, greater social acceptance & higher disposable
income are expected to propel growth in per capita consumption of beer
from ~ 2 litres per annum to 5 litres over the next decade.
Pan-India presence, strong brand recall to sustain market leadership
UBL, with 18 owned and 10 contract manufacturing facilities, has a pan
India presence. Also, the company has a strong distribution network,
which enables it to capture the major market in India. UBL with its 14
major brands enjoys strong patronage and commands a market share in
excess of 50%. Though competition is rising from other global
companies, we believe UBL would be able to sustain its market leadership
as it would be difficult for competitors to emulate the reach of UBL due to
the complexity of the liquor business model in India.
Resilience to competition, nascent industry translate to premium valuations
UBLs resilience to competition together with the tutelage of Heineken,
positions the company as the numero uno player in the industry. UBLs
revenue, EBITDA and PAT are expected to grow at 19.5%, 21.7% and
32.5% CAGR, respectively, over FY14-17E due to nascent state of the
industry. Further, in more mature markets, global peers of UBL trade at
nearly 2.2x FY17E Mcap to sales. Subsequently, we assign a multiple of
2.1x FY17E to arrive at a target price of | 950 and recommend BUY.
Exhibit 1: Key Financials
Research Analysts name
FY13
FY14
FY15E
FY16E
FY17E
3898.7
4229.7
5037.6
6075.1
7173.1
EBITDA (| crore)
476.9
588.1
706.1
875.4
1053.5
Net Profit (| crore)
172.1
226.0
305.6
408.6
521.3
Bharat Chhoda
bharat.chhoda@icicisecurities.com
Net Sales (| crore)
Soumojeet Kr Banerjee
soumojeet.banerjee@icicisecurities.com
EPS (|)
6.5
8.5
11.6
15.5
19.7
P/E (x)
124.7
95.0
72.8
54.5
42.7
14.2
12.6
11.3
9.9
8.2
Price/Book (x)
EV/EBITDA (x)
47.3
38.0
32.6
26.4
21.7
RoCE (%)
10.9
14.3
17.1
19.8
21.5
RoE (%)
11.4
13.2
15.5
18.1
19.2
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research
Company background
Exhibit 2: Shareholding pattern Q2FY15

Shareholder's Category
74.8
Institutional Investors
19.6
General Public
25.0
20.0
United Breweries Ltd (UBL), with more than 50% market share and 14
brands, is the largest brewery company in India. UBL sells nearly 138.7
million cases of beer, growing at ~8.3% CAGR in 2010-14. The company
was founded by Scotsman Thomas Leishman. Vittal Mallya was elected
the first Indian director in 1947. UBL commenced with five breweries in
South India in 1915. Over the years, it acquired multiple breweries in the
region to augment its production. Currently, the company has 18 owned
breweries and 10 contract manufacturing units to cater to growing
demand. UBL has robust quality management systems strictly adhering to
quality guidelines laid down in ISO 9000. Besides, the beer from market
shelves is periodically scrutinised on 40 different parameters as per the
standard laid down by the European Brewery convention. Flagship brand
Kingfisher is an internationally recognised brand while Kingfisher
Premium Lager Beer is available in 52 countries. In 2006, Scottish &
Newcastle (S&N) acquired ~37.5% in UBL as a strategic investment in a
deal worth | 940 crore. S&N acquired 17.5% through a preferential
allotment @ | 575/share while the rest was acquired through public open
offer at a similar price. However, in 2008, Heineken acquired S&N and,
thereby, acquired a stake in UBL. Subsequently, Heineken increased its
stake in UBL to 39%.
Holding (%)
Promoters
5.6
19.5
19.3
19.5
19.2
19.3
15.0
10.0
5.0
0.3
0.3
0.3
0.2
0.3
0.0
Q2FY15 Q1FY15 Q4FY14 Q3FY14 Q2FY14
FII
DII
Exhibit 3: Chronology of United Breweries
UBL forays into brewing with

five breweries in South India
1915
1944-48
First bottled beer under the

label "Export Beer". Vittal
Mallya became the first Indian
Chairman
Kalyani Breweries set up.

Kesarwal Beverage set up in
Goa
1950-60
Acquires Empee Breweries. Enters

into strategic alliance with Scottish
& Newcastle in 2006. Heiniken
acquires UBL shares via S&N
takeover
Acquires Associated Breweries

& Distilleries and Mangalore
Breweries & Distilleries
1970-80
High range breweries set up in

Chertalla in Kerala. UB exported
beer to Aden and Middle East.
Canned beer introduced
1990-00
2001-02
2002-09
Acquires GMR Vasavi, MP Breweries

and 41% share of Inertia Industries,
total 65% share of Associated
Breweries and 97% of Mangalore
Breweries & Distilleries Ltd
2010-14
Over the years, Heineken

increased its stake to 39% from
37.5%. Further, UBL plans to set
up a greenfield brewery in Bihar
& Rajasthan. Bihar brewery is
ready with initial capacity of
500,000 to 700,000 cases a
month and scalable up to
1000000
Page 2
Management Profile
Vijay Mallya: (Chairman) Dr Vijay Mallya is a two time Member of
Parliament and Chairman of The UB Group, one of Indias largest
conglomerates with diverse interests in brewing, distilling,
pharmaceuticals, aviation, real estate, engineering, fertilisers,
biotechnology and information technology. He was born in 1955 and
became the Chairman of The UB Group at 28 following his fathers
demise.
Kalyan Ganguly: Kalyan Ganguly, the President & Managing Director of
United Breweries, has been heading the beer business of the UB Group
since 1995. He joined the group on February 1, 1979. Prior to joining the
UB Group, he was with Reckitt & Colman. He is a graduate of Presidency
College, Kolkata and completed his post-graduation diploma in Business
Management from XLRI, Jamshedpur. Mr Ganguly has been on the Board
of UBL since March 30, 2002. He is also on the board of other companies
like Maltex Malsters Ltd, Indian Premier Football Association Ltd and
Kingfisher East Bengal Football Team Pvt Ltd.
AK Ravi Nedungadi: A trained chartered and cost accountant, Mr
Nedungadi joined the UB Group in 1990 as the corporate treasurer. Within
two years, he became the Group Finance Director of the groups
international business managing the businesses of UB International,
which included the paint giant Berger Jenson and Nicholson with
operations spanning 27 countries. He was instrumental in listing the
Berger Group companies on the London and Singapore bourses. Other
boards in which he is a member are Sanofi India and Bayer Crop
Sciences.
Duco Reinout Hooft Graafland: Duco Reinout Hooft Graafland studied
business administration at Erasmus University in Rotterdam and finished
his post-graduate studies to become a chartered accountant. He started
his career as a management trainee with Heineken Nederland in 1981 and
became brand manager for Vrumona, Heinekens soft drink company. He
continued as area export manager for Central and West Africa. Mr Hooft
Graafland has been on the Board of UBL since December 2009.
Roland Pirmez: Mr Pirmez was appointed President of Heineken Asia
Pacific Pte. Ltd in June 2013. Prior to that, he had been the CEO of APB
since 2008. He has an engineering degree in agriculture and masters
degree in brewing from the University of Louvain-la-Neuve in Belgium. Mr
Pirmez, with 27 years experience in the beer industry, was previously
CEO of Heineken Russia, a position he held from 2002 to 2008. He was
general manager of APBs associate, Thai Asia Pacific Brewery Co, for
four years in 1998-2002. Prior to Thailand, Mr Pirmez held different
positions in Africa and joined Heineken as Managing Director, Angola, in
1996. His expertise in the specific functional areas includes extensive
experience in the beer industry, brewing beer and general management.
Mr Pirmez has been on the Board of UBL since September 13, 2013.
Henricus Petrus van Zon: Henricus Petrus van Zon, is an MSc in business
economics and post graduate in accountancy from Erasmus University,
Rotterdam, Netherlands. He has also completed various executive
development programmes from IMD-Lausanne, Switzerland and InseadFontainebleau, France. In 2007, he joined Brau Holding International
Gmbh and Co. KgaA, a joint venture between Schorghuber UG and
Heineken NV as Executive Director and CFO. During his tenure, he has
also been operationally responsible as the Chairman of the Management
Board and CFO of Kulmbacher Brauerei AG.
Page 3
Investment Rationale
Beer market geared to grow on flamboyant lifestyle!!!
The Indian beer industry remains at an infancy stage with 270 million
cases of beer being consumed in the country in FY14. The beer segment
grew at a steady rate of ~8% CAGR over FY10-14. India remains one of
the fastest growing beer markets in the world with abysmally low per
capita consumption (pcc) of 1.9 litres per annum against 34 litres in China
and a whopping 65 litre per annum in Brazil. The beer industry in India
can be largely segregated into mild and strong beer segments with the
latter having a greater market share (40:60 ratios). Growth in urbanisation
and change in lifestyle with increasing acceptance towards alcohol
consumption is expected to buoy beer volumes significantly. Also, beers
positioning as a milder drink compared to liquor bodes well with the
young crowd (age group 15-24 years), which forms nearly 20% of the
population and grew at a CAGR of 2% over the last decade. Further, as
Indias demographic dividend improved, the dependency ratio declined
significantly over the past decade, thereby leading to higher disposable
income. Consequently, we anticipate beer industry volumes will grow at a
steady rate of ~6.5% over 2014-17.
The Beer story: Long way to go

The beer industry in India grew at a steady ~12% over 2004-14. The
industry can be largely segregated into mild and strong beer with the
latter garnering a larger market share (60%). The Indian beer industry is
quintessentially covered by three to four major players with United
Breweries in pole position (51%) followed by SABMiller (27%) and
Carlsberg (6%). With nearly 60% of the population in the drinking age (1559 years) and low per capita consumption of 1.9 litre/year, India provides
huge scope for growth. Any minor change in the consumption pattern
would provide a huge delta owing to the significant population base.
Exhibit 4: Alcohol industry
Alcohol Industry
Beer
Indian Beer
(260-270 mn cases)
Imported Beer
(<3 mn cases)
Distilled Spirits
IMFL
(305 mn cases)
Imported Spirits
(<3 mn cases)
Wine
Indian Wine
(1.7 mn cases)
Imported Wine
(<0.5 mn cases)
Country Liquor
(280-285 mn cases)
Source: ICICIdirect.com Research
Page 4
Exhibit 5: Growth in beer volume over past years

1200
CAGR 9%
1000
800
Million Cases
The beer segment posted healthy volume growth

of ~8% over FY10-14. Buoyed by growth in
disposable income coupled with a growing young
population and a change in perception towards
drinking, we anticipate beer volumes will post a
steady CAGR of ~9% over FY14-30
600
CAGR 10%
1092
400
200
0
156
166
187
225
235
263
270
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY30
Source: Technavia Report, ICICIdirect.com Research
Exhibit 6: India: fastest growing market in APAC region

Beer market growth CAGR (201120)
The Indian beer market is the fastest
growing one in the Asia Pacific (APAC)
region with one of the lowest per capita
consumption. This provides enormous
scope for the brewing industry in India as
India with PCC of 1.9 litres per annum
and average population growth of ~1.1%
in the next decade provides tremendous
scope for growth
PCC in Litres
India
8%
1.9
Singapore
2%
28.8
Indonesia
2%
0.9
Malaysia
2%
7.6
Papua New Guinea
6%
12
Japan
0%
45.8
Australia
0%
78.4
Thailand
5%
26.4
China
4%
35.9
South Korea
2%
37.3
Taiwan
1%
21.9
Vietnam
6%
29.5
Mongolia
7%
27.7
Source: UB presentation, ICICIdirect.com Research
Exhibit 7: Per capita consumption remains one of the lowest in the world
80
PCC in Litres per Annum (LPA)
Despite being one of the largest and fastest growing

beer markets, India has one of the lowest per capita
consumption of alcohol across the globe. Drinking
habits in India are influenced, to a large extent, by
religious sentiments and attached taboo rather than
climatic conditions as similar tropical countries like
Brazil have higher per capita consumption. An
alteration in drinking habits will provide a significant
delta to industry volumes
The per capita consumption of beer in China grew at
~13% CAGR over 1965-2005 whereas over the last
decade it grew at a CAGR of 4%. In contrast, in India,
the PCC grew at a paltry 4.6% over 1965-2005 while
in the past decade it grew at nearly 26%
70
60
50
40
30
64.5
76.1
35.9
20
10
1.9
0
Brazil
Russia
China
India
Per Capita Beer Consumption
Source: UB Presentation ICICIdirect.com Research
Page 5
Exhibit 8: Steady growth in per capita consumption for domestic market

7.0
5.0
4.8
5.7
2028E
2024E
2022E
2020E
2018E
2016E
1.2
2008
0.0
2014
1.0
2012
2.0
3.5 3.7
3.0 3.2
2.8
2.7
2.3 2.4 2.5
1.9 2.0 2.1 2.2
1.8
1.7
1.5
2010
3.0
4.4
4.1
2026E
4.0
5.2
6.2
2030E
6.0
PCC in LPA
Driven by a change in lifestyle and growth in disposable

income, per capita consumption of beer is expected to
grow to 2.5 litre in 2018 from 1.2 litre in 2008. Further,
according to our assumption, we expect industry volumes
to grow at a CAGR of ~8% over FY15-30. Consequently,
per capita consumption is expected to improve to 6.2 litre
during the same period. Growth in beer consumption
together with demand for novelty in the segment pushes
premiumisation of beer and consumption in the country
Per capita Beer Consumption
Exhibit 9: Per capita consumption of beer remains lowest among beverages in India
70
Per Capita Consumption in Ltrs
Beer consumption in India remains abysmally

low compared to other countries. Indians prefer
hot drinks and are the largest consumers of
milk in the world. However, over 2000-10, beer
consumption per capita has tripled whereas
that of other beverages has remained mostly
constant. Beer consumption is expected to gain
in the future with changes in lifestyle and a
shift in preferences
50
40
39
59
58
58
56
56
60
41
41
41
42
42
43
6
0.9
62
62
61
60
60
59
44
45
46
47
30
20
10
0
5
0.5
2000
0.6
2001
0.6
2002
0.6
0.7
0.8
2003
2004
2005
Beer
Soft Drinks
2006
Milk
1.1
1.2
2007
2008
1.3
2009
11
1.5
2010
Hot Drinks
Page 6
Urbanisation, enriched lifestyle to ramp up beer volumes

Indian urbanisation is gathering pace rapidly with nearly 68 cities
expected to have more than one million populations from the current 42
cities by 2030. Some of the key states to experience such rapid growth
are Karnataka, Maharashtra and Tamil Nadu. These states are some of the
highest beer consuming states/regions with strong distribution networks
and consumption patterns. Further, as GDP growth improves, cities (Tier I
& Tier II) will account for a larger pie vis--vis rural areas. Consequently,
beer industry volumes are expected to get a leg up as more people move
to urban areas.
2008
120
57
37
52
36
Beer Cases (In Million)
44
Maharashtra
44
58
Punjab
66
Exhibit 11: States with high beer consumption
Karnataka
67
53
Gujarat
80
70
60
50
40
30
20
10
0
Tamil Nadu
% Population
Exhibit 10: Urbanisation picking up in key states
100
43
80
60
20
21
20
30
0
Andhra Pradesh
2030
Source: McKinsey report, ICICIdirect.com Research
22
35
40
18
10
10
9
16
13
Karnataka
Kerala
UP
2010-11
2011-12
2012-13
Source: ICICIdirect.com Research
The beer industry is largely concentrated in South India where the market
share is nearly 50%. Also, states in the region like Tamil Nadu, Karnataka,
Kerala and Andhra Pradesh are expected to see a robust rise in urban
population of nearly 51%, 83%, 63% and 94%, respectively, by 2030,
thereby supporting beer industry volumes.
Exhibit 12: Beer market region-wise segmentation
North
12%
East
2%
South
49%
West
37%
Source: UB Presentation, ICICIdirect.com Research
Demography, lower dependency favour buoyant lifestyle

India has a very favourable demographic proposition with ~60%
population in the age group of 15-59 years, up 3.4% on a decadal basis.
As a result, nearly 730 million people lie in the legal drinking age while
another 83 million are likely to be added by CY17. Furthermore, there is a
growing trend of social acceptance of alcohol on account of improved
lifestyle together with demand for milder alternatives to buoy beer
volumes. However, the countrys per capita consumption continues to
Page 7
remain low at ~1.9 litre per annum. Any increase in per capita
consumption is expected to alter the industry growth significantly on
account of the large population base.
Also, as the dependency ratio over the past decade has declined nearly
100 bps, an improvement in lifestyle on account of elevated per capita
income (from $540 in FY07 to $1140 in FY13) will significantly boost
discretionary expenditure, thereby improving the demand for beer and
other alcoholic products.
Exhibit 13: Entry of increasing number of households in higher income group
150
No of Household (Million)
By 2025, the number of households earning | 200,000500,000 is expected to increase from 11 million to 93
million whereas that earning between | 500,000-10,00,
000 is anticipated to go up to 33 million from 2 million.
Therefore, by 2025, nearly 117 million people are
expected to be added to the upper and middle income
groups. Their consumption is expected to grow ~12.5 x.
This structural shift is expected to provide a fillip to
discretionary expenditure and make beer affordable to a
larger number of people as this category forms the
largest chunk of aspiration buyers
93
125
50
100
75
50
95
33
25
10
1
11
Globals (>1000)
101
91
Strivers (5001000)
Seekers(200-500) Aspirers(90-200)
2005
Deprived(<90)
2025
Source: McKinsey Report, ICICIdirect.com Research, Household income in |1000
Exhibit 14: Consumer expenditure on alcohol

Consumer expenditure on alcohol is expected to
grow at a CAGR of 3.5% over 2013-17. Increased
disposable income has led to growth in
discretionary items fuelling growth for beer and
other alcoholic products
65,000
| crores
60,000
59,850
58,590
57,330
55,000
55,440
52,290
50,000
50,400
45,000
2012
2013
2014
2015E
2016E
2017E
| Crs
Source: Radico Khaitan presentation , ICICIdirect.com Research
Page 8
(Population million)
Disposable income has increased at a CAGR of

~11.5% over the past decade, thereby increasing
the expenditure capacity of individuals
1400
70000
1200
60000
1000
50000
800
40000
600
30000
400
20000
200
10000
0
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
1998-99
1999-00
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
Population (Million)
(|) Per Capita Disposable Income
Exhibit 15: Per capita disposable income
Per capita/disposable income (|)
Source: RBI handbook , ICICIdirect.com Research
Beer: Alternative to spurious/poisonous liquor

With thousands of deaths in the past decade due to spurious liquor, the
impetus has been on providing safer alternatives. Beer, due to its inherent
way of preparation (5-8% alcohol content) is less harmful for
consumption compared to cheap liquor. Also, its basic ingredients of
barley, water, hops and yeasts along with minerals and anti-oxidant
properties, provides a healthier option.
Exhibit 16: Death due to spurious liquor
Due to consumption of better category alcohol
such as beer and Indian made foreign liquor (IMFL)
deaths due to alcohol have seen a decline over the
years
1600
1400
No of Deaths
1200
1000
800
600
1450
1202
1435
400
80
70
60
731
200
Beer is 2.6x more

expensive in per unit of
pure alcohol terms
compared to hard liquor
0
2009
2010
2011
2012
Units
50
40
75
Source: NCRB , ICICIdirect.com Research
30
20
10
Further, compared to hard liquor, beer is taxed quite heavily, thereby

making it inaccessible to a larger number of people who then rely on
cheap substitutes like country or local liquor that is more harmful.
29
0
Bagpiper
Kingfisher Premium

As beer is more expensive on a per unit of pure alcohol
basis, it discourages a shift towards beer, thereby
leading to a greater flourishing of the illicit liquor
business. If the government changes the taxation policy
based on alcohol content it would make beer accessible
to people, thereby reducing health hazards
Page 9
Kingfisher: Ubiquitous beer in India

With more than 138 million cases in FY14 and ~51% market share,
Kingfisher is synonymous with beer in India. UBL, together with Heineken,
has nearly 15 brands covering various price points right from the
economy (London Pilsner) to the super-premium category (Heineken).
Over the years, UBLs volume grew at a CAGR of ~8.3% in FY10-14
driven by its strong distribution network pan-India and availability at
various price points. The beer industry in India is skewed towards strong
beer vis--vis lighter ones. Consequently, much of the beer brands in
UBLs stable belong to the strong category. With Heineken as joint
promoter of UBL post its acquisition of Scottish & Newcastle (S&N) in
2008, it acquired 37.5% of UBL and increased its share to 39% in FY14.
Also, Heineken put three members on the UBL board including the CEO,
thereby taking over the reins of the company. Further, Heineken is
expected to introduce better technology in beer manufacturing in India
along with innovative schemes for promotion, thereby augmenting UBLs
volume. Going ahead, as the industry is expected to grow at a CAGR of
6.5% over FY14-17, UBL is expected to gain market share and increase its
volume at a CAGR of ~7.3% over the same period.
Kingfisher: Synonymous with Indian beer

The Kingfisher brand is synonymous with beer in India with a brand
market share more than double the nearest competitor. Given the strong
brand recall and pull in the market, UBLs volumes grew at a CAGR of
8.3% over FY10-14 vis--vis industry volume growth of 7.8%, thereby
gaining and maintaining a superior market share of more than 50% in as
many years. UBL is a market leader in both the domestic premium lager
and domestic standard lager beer segments with a market share of ~63%
and 36%, respectively.
Exhibit 17: Industry volume vis--vis UBL volumes
300
225
Million Cases
250
200
187
166
156
125
150
100
270
263
235
75.3
82.4
133
139
138.7
101
50
0
FY08
FY09
FY10
FY11
Volume (Industry in Million Cases)
FY12
FY13
FY14
UB volume (million cases)
Source: Company , ICICIdirect.com Research
UBL mainly has eight products under the brand name Kingfisher
catering to various price points and beverage preferences i.e. strong or
mild besides strong brands such as Kalyani Black Label, Zingaro and
London Pilsner. UBL, together with Heineken, forms one of the most
formidable players in the Indian beer industry. With more than 54,000
outlets, Kingfisher beer is available across India making it a much sought
after beer brand in the country.
Page 10
Resilient to competition, maintaining market share

As UBLs competitive dynamics are strong it braved competition to
remain the leading brewery company in the country. In the past years,
even with the entry of new players, the company has been able to
maintain its market share owing to strong brand recall and its near
omnipresence through robust distribution and logistics management.
Over the years, SABMiller lost its market share to Carlsberg, though UBLs
share was not hampered, to a large extent. Going ahead, with 14 brands
in its quiver and their popularity coupled with tutelage of Heineken, we
expect UBL to gain market share from smaller/regional players in the
growing Indian brewery market.
Exhibit 18: Market share movement vis--vis other players
60
Market Share (%)
50
40
57
53 56 53
51
51
50
37 35
27 27 27
25 23
30
20
10
013
556
5444444
2222233
0211111
Mohan
Meakin
Mount
Shivalik
Budwiser
0
UB
SAB
2007
Carlsberg
2008
2009
2010
2011
2012
44
88
8
77
Others
2013
UBL is present at multiple price points right from London

Pilsner in economy segment to the Heineken in the
super-premium category. With addition of Heineken, UBL
has been able to position itself against the likes of
Corona, Peroni and Stella Artois and has been able to
garner significant market share.
Super Premium
Brand:Heineken
@ PI- 170
Premium
Brand: Kingfisher Ultra
@ PI- 135
Mainstream
Brand: Kingfisher Premium @
PI- 100
Economy
Brands: London Pilsner @ PI- 80
PI= Price Index
Advantage UBL: Heineken to edge out global competition

The UB group as a part of its strategic investment divested nearly 37.5%
of United Breweries to the Scottish & Newcastle (S&N) Group in 2005.
However, post the acquisition of S&N by Heineken; it acquired 37.5% of
UBL. With Heinekens premium image, UBL is able to position itself
against international players such as Carlsberg, Tuborg and Stella Artois.
Heineken: Needs no introduction

Heineken is the worlds third largest brewer with nearly 9% market share
and producing over 172 million hectolitre of beer annually. The company
is also one of the largest producers of cider/perry since its acquisition of
Scottish & Newcastle in 2008. Heineken has modified its global footprint
significantly in the last decade by pruning its exposure in the slow
growing Western Europe region to 29% in 2010 against 53% in 2001. The
company is consciously focusing on emerging markets like Latin America
where it draws ~25% of its volume in 2010 vs. 6% in 2001. It is in the
Asia-Pacific (APAC) region that Heineken lacks a significant presence,
drawing a mere 3% volume share. In the APAC region, the company
mostly operates through joint ventures (Asia Pacific Breweries China and
United Breweries India). Further, as the slowdown in Europe continues,
prime markets like East & West Europe with more than 50% volume share
for Heineken drag its growth. Consequently, the next focus region for
Heineken is APAC as the region with China and India is one of the largest
beer markets in the world and offers it lucrative growth opportunities.
Page 11
Exhibit 19: Global players beer volume
300
225
356
109
106
80
58
56
55
Tsingtao
Molson
Coors
Brewing
Modelo
Yanjing
Brewery
172
Heineken
Sabmiller
Anheuser Busch
Inbev
44
Kirin Group
173
75
Carlsberg
Group
150
China
Resources
Enterprise
Million Hectolitres
375
Million Hectolitre
Exhibit 20: Volume share for Heineken region wise

60
53
% Volume Share
50
40
Asia is the fastest growing region in the world with

~5% growth rate YoY in terms of volume. Heineken
with its two acquisitions in the region is trying to
catch up with its peers both in terms of volume and
market share
25
30
20
10
6 5
3
2 2
10
15 14
20
29
22
0
Latin America
Asia-Pacific
North America Africa & Middle Eastern Europe

East
2005
Western
Europe
2011
Heineken a laggard compared to global peers
5
0.5
East Europe
West Europe
3
North Am
LatAm
3
Asia
Africa
3
Global
% Growth
11
7 6
2001
6
5
4
3
2
1
0
35
34
Compared to its global peers such as Anheuser-Busch InBev and

SABMiller, Heinekens exposure in the Asia-Pacific region is very
restricted. Heineken through Asia Pacific Breweries in China and United
Breweries in India has boosted its presence in the region. Heinekens
presence has been weak in the region, especially China, as Heineken
mainly brewed premium lager (higher alcohol content of ~6-8%) against
standard larger. However, this can be of significant interest to India as
India is mostly a premium larger market and growing at a more rapid
pace.
Exhibit 21: Comparable financials of Global Peers (Million $)
Revenue
EBITDA Margin
(%)
PAT
1999
2014
1999
2014
17188.0 17.4
39.8
245.5
16518.0 16.0
22.6
EBITDA
Peers
1999
2014
1999
Anheuser Busch
4632.6
43195.0 805.5
2014
CAGR (1999-2014)
Revenue EBITDA
PAT
32.4
Sab Miller
2752.0
16704.0 629.0
5720.0
22.9
34.2
340.0
3650.0
12.8
15.9
17.1
Heineken
6570.3
25507.6 1352.4
5492.6
20.6
21.5
580.2
2108.0
9.5
9.8
9.0
Carlsberg
3575.4
11853.3 438.6
2443.1
12.3
20.6
171.1
1059.9
8.3
12.1
12.9
Source: Company Presentations , ICICIdirect.com Research
Page 12
Exhibit 22: Asia at the beginning stage of PLC

As Asia-Pacific region is one of the fastest
growing regions in the world, the internal market
dynamics in terms of Product Life Cycle (PLC) is
also very favourable in the region. As Heineken
has lagged vis--vis its peers to enter into these
markets with dynamics still remaining favourable
it is expected to improve market share in the
region. Consequently, through United Breweries in
India; Heineken is expected to employ push
strategy thereby improving market share for UBL.
Source: Heineken , ICICIdirect.com Research
The Indian beer industry volumes grew at a CAGR of ~13% over FY04-14.
However, in the global space, the Indian beer industry is still at the
beginner stage in its product life cycle (PLC). Hence, it provides significant
scope for players like Heineken to expand their product portfolio in India
considerably.
Improvement in corporate structure post Heineken

Post Heineken, UBL has unified its highly complex corporate structure,
thereby bringing better transparency in its operations. UBL merged
Millennium Alcobev Pvt Ltd (MAPL) and Chennai Breweries Pvt Ltd
(CBPL). The mergers provided better efficiency in running operations and
optimising cashflows. The mergers improved the brewing capacity of UBL
in Southern India, which accounts for nearly half of the total beer
consumed in the country.
Page 13
Exhibit 23: Change to leaner corporate structure
Pre-2010
UB Group
Heineken
Promoter Group
Present
100%
100%
UB Nizam
100%
UB Ajanta
Heineken
Chennai Breweries
Promoter Group
75%
25%
Public
UB Group
UBL
100%
40%
ABDL
Public
50%
75%
MAPL
10%
100%
UMBL
89%
100%
Empee
UBL
(with all merged entities)
25%
MBIL
Page 14
Robust distribution network ensures countrywide footprint

In the Indian alcohol industry, ~75% of the distribution is handled by
government corporations, 21% by distributors and the remaining 4%
from direct sales. As it is a state subject, alcohol is complex in terms of
distribution and logistics with multiple counterparties as each state acts as
a different entity, thereby limiting economies of scale. However, UBL, with
its 18 owned and 10 contract breweries, covers all the major markets in
the country and streamlines distribution. Further, its established
distributor network coupled with pioneering cold chain management
provides UBL the distinction of availability across the country along with
freshness being intact in beer.
Exhibit 24: Industrys channel wise break down of sales
Exhibit 25: Distribution mechanism in various states
4%
21%
Government Corp
Distributors
Direct Sales
Andhra Pradesh
Maharashtra
CSD
Kerala
Goa
BSF
Odisha
Daman
CRPF
Karnataka
Puducherry
Delhi
Tamil Nadu
75%
Government Corporations
Distributors
Direct Sales
Mahe
West Bengal
Rajasthan
Sikkim
Chhattisgarh
Assam
Exhibit 26: Location of distilleries
With its leadership in cold chain management, UBL

manages a huge distribution network. Consequently,
with higher point of sale visibility, the Kingfisher
brand gets enormous thrust across the country
In terms of number of distilleries and presence across
states; UBL leads its nearest competitor by ~3x and
1.6x, respectively. Consequently, it is able to muster
nearly twice the market share than its prime
competitor SABMiller
Player
No of
Distilleries
United Breweries
28
15
Sabmiller
10
Carlsberg
No of States
Page 15
Financials
Revenues to grow at steady pace
UBLs volumes had grown at 23% CAGR over FY09-11 while the revenue
per case had increased at 4.5% CAGR. During this period, beer industry
volumes grew at 16% CAGR while the market share of UBL expanded
from 44% in FY09 to 53% in FY11. In FY11-14, industry volume CAGR
declined to ~9% as volume growth was impacted owing to a sharp
increase in excise duty in FY11-14. UBLs volumes increased at a CAGR of
just 3.5% over FY11-14 leading to a decline in market share to 50% in
FY14 while the revenue per case increased at a CAGR of 11.5%. The
sluggishness in volume growth for UBL can be attributed to slower
industry growth coupled with global MNCs aggressively entering the
Indian market and denting UBLs market share, to some extent. Indian
beer industry volumes are expected to grow at ~8% in the next decade.
We expect UBL to grow in tandem with the industry and gradually reclaim
its lost market share primarily driven by a strategic change in the product
mix due to more operational control vesting in the hands of Heineken.
Exhibit 27: UBL volume trend
Exhibit 28: UBL revenue per case trend
150
125.0
133.0
139.0
138.7
160.8
146.7
171.2
100
Million Cases
200
50
0
FY11
FY12
FY13
FY14
FY15E
FY16E
700
600
500
400
300
200
100
0
FY17E
355
FY11
Volume (Mn cases)
FY14
FY15
FY16
FY17
7173
50
3899
4230
40
5038
34.8
39.9
42.4
44.5
FY13
FY14
30
%
| cr
FY13
Exhibit 30: Excise duty as percentage of gross revenue
6075
3559
FY12
492
655
Exhibit 29: Net revenue trend
3060
447
595
Revenue per case
8000
7000
6000
5000
4000
3000
2000
1000
0
423
541
20
10
0
FY11
FY12
FY13
FY14
FY15
Revenue
FY16
FY17
FY11
FY12
Exise duty as % of Gross revenue
Page 16
Exhibit 31: UBL volume and realisation growth rates

23.2
25
20
%
15
11.5
7.3
10
8.4
7.0
4.5
3.5
10
0
Volume CAGR
FY09-11
Volume CAGR
FY11-14
Assumed volume
CAGR FY14-17
Realisation CAGR
FY09-11
Realisation CAGR
FY11-14
Assumed
realisation CAGR
FY14-17
Industry volume
CAGR FY09-11
Industry volume
CAGR FY11-14
Volume CAGR FY09-11
Volume CAGR FY11-14
Assumed volume CAGR FY14-17
Realisation CAGR FY09-11
Realisation CAGR FY11-14
Assumed realisation CAGR FY14-17
Industry volume CAGR FY09-11
Industry volume CAGR FY11-14
EBITDA margin to continue gradual improvement

During FY09-14, UBLs EBITDA margin was in the range of 10.3% (FY10)
to 12% (FY13). In FY14, the EBITDA margin showed an improvement of
170 bps YoY to 13.9%. The improvement in EBITDA margin despite
flattish volume growth in FY14 was achieved on the back of price
increases in open markets, better product mix and control on input costs.
Further, the company is planning to reduce the packaging cost by
continuing to infuse patented bottles into the market. Since the bottles are
patented and the name and logo of the company is embossed on the
bottles, they cannot be used by other brewers and are necessarily
supplied back to UBL. This strategy is showing positive results as the cost
of recycled patented bottles is significantly lower than the earlier system
of buying industry bottles. Also, the company is exploring the idea of
reducing power consumption by conversion of organic waste into energy
to obtain savings in energy costs. Consequently, we expect the EBITDA
margin to gradually improve ~70 bps over the next two years to 14.7% in
FY17 with EBITDA posting 15.7% CAGR in FY14-17E to | 1054 crore.
28.0
28.1
27.4
27.8
26.8
26.4
26.6
31.1
29.6
26.4
25.3
25.2
25.2
25.0
14.5
15.8
15.8
15.6
15.1
15.1
15.0
FY11
FY12
FY13
FY14
FY15E
FY16E
FY17E
40.0
20.0
0.0
RM cost
Packing cost
18.9
Selling & promotion exp
18.9
18.8
Other Exp
477
588
706
875
1054
12.2
390
412
800.0
| Cr
17.4
11.6
600.0
400.0
200.0
0.0
EBITDA
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
60.0
14.7
FY17E
18.2
14.0 14.4
FY16E
14.9
13.9
FY15E
13.6
12.8
FY14
80.0
1000.0
FY12
1200.0
100.0
FY13
Exhibit 33: EBITDA & EBITDA margin trend
FY11
Exhibit 32: Expenses as percentage of sales
EBITDA Margin (%)
Page 17
Exhibit 34: Average yearly barley price index

250
153
150
130
124
111
100
178
158
151
220
213
202
200
50
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Average yearly barley price Index

Bottling and malt forms the largest component of the
packaging and raw material charges. However, over the years
bottling charges have been controlled due to embossed and
reusable bottles utilised by UBL
% to Sales
Malt
Brewing
Material
Bottle
Packing
Material
Other
material
FY11
FY12
FY13
FY14
7.0
8.7
9.0
8.4
4.9
4.6
4.9
4.5
20.9
20.1
17.2
16.4
9.3
9.4
9.2
9.0
3.5
2.5
1.9
2.7
PAT margin to perk up

UBL has been able to improve the net profit margin from 2.3% in FY09 to
5.3% in FY14. The improvement has been brought about by a reduction
in interest and depreciation cost. The interest cost as a percentage of
EBITDA has declined from 46% in FY09 to 14% in FY14 while the
depreciation charge as percentage of EBITDA has reduced from 40% to
34%. An improvement in EBITDA in FY14-17E along with control on fixed
costs would enable UBL to improve its PAT margin to 7.3% by FY17E.
Even from the perspective of quality of earnings, UBL is expected to see
an improvement with profitability growth being driven by the operational
performance and share of other income in net profit coming down from
10.8% in FY14 to 6% in FY17E.
Exhibit 35: Lower fixed cost to boost PAT margin

70
60
58
50
34
40
30
20
31
36
36
34
24
17
20
0
FY11
FY12
FY13
Interest cost as % of EBITDA
25
22
14
11
10
11
FY14
FY15E
FY16E
FY17E
23
10
28
Depn as % of EBITDA
Other income as % of PAT
Page 18
Exhibit 36: PAT & PAT margin (%) trend

600
4.4
200
147
127
521
3.6
226
173
409
306
| Crs
6.1
5.3
4.8
300
100
6.7
500
400
7.3
2
1
0
0
FY11
FY12
FY13
FY14
PAT
FY15E
FY16E
FY17E
PAT margin
Debt equity and return ratios to improve

An improved operating performance along with lower fixed cost would
enable UBL to improve its profitability at the net level. We expect the
RoNW and RoCE to improve from 13.2% and 14.3% in FY14 to 19.3% and
21.6%, respectively, in FY17E. Also, we expect the debt-equity ratio to
improve from 0.6x in FY14 to 0.4x in FY17E.
Exhibit 37: RoE, RoCE expected to improve further
25
20
%
15
10
5
21.5
19.8
13.5
17.1
14.3
11.9
10.9
15.5
13.2
11.4
18.1
19.2
FY16E
FY17E
11.4
9.3
0
FY11
FY12
FY13
FY14
ROCE
FY15E
RONW
Exhibit 38: Debt-equity ratio expected to stabilise, going ahead

1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
0.9
0.6
0.6
0.5
0.5
FY11
FY12
FY13
FY14
FY15E
0.5
FY16E
0.4
FY17E
Debt Equity
Page 19
Valuation
The beer industry in India grew at a CAGR of ~13% over 2004-14 and is
further expected to grow at ~8% CAGR over the next decade. As the
industry is in a nascent stage with per capita consumption of 1.9 litre per
annum, it provides significant scope to grow as a change in lifestyle and
increased disposable income boost consumption of beer. UBL, with its
leading market share of ~51% and strong brand recall, is the foremost
player in the segment. The company is expected to further expand its
market share in the industry.
As the Asia-Pacific region and, more specifically, India remains one of the
fastest growing beer markets in the world, we expect UBL to be well
placed and be the prime beneficiary to capture the opportunity.
Subsequently, we anticipate UBL will post significantly robust growth with
gross sales posting a CAGR of ~18% with EBITDA and PAT growing at a
CAGR of ~22% and 32%, respectively, over FY14-17. Globally, along with
Heineken, its competitors such as Anheuser-Busch InBev and SABMiller,
which operate at more mature markets, trade at an average of nearly
2.2xs FY17E market cap to sales. Consequently, for UBL, with its largest
market share and strong brand portfolio coupled with favourable
demographics, we assign 2.1xs Mcap/gross sales multiple to arrive at a
target price of | 950 and arrive at a BUY recommendation for the stock.
Exhibit 39: Global peer valuation
Company
Two year forward Mcap to Sales Multiple
Anheuser Busch Inbev
2.9
Sabmiller
2.2
Heineken
1.6
Average
2.2
Source: Bloomberg, ICICIdirect.com Research
Exhibit 40: Valuation

Sales
Sales (|Cr) Growth (%)
EPS
EPS (|) Growth (%)
PE Mcap/Sale
s (X)
(x)
RoNW
RoCE
(%)
(%)
11.4
10.9
FY13
3898.7
FY14
4229.7
8.5
8.5
31.3
95.0
3.0
13.2
14.3
FY15E
5037.6
19.1
11.6
35.2
72.8
2.6
15.5
17.1
FY16E
6075.1
20.6
15.5
33.7
54.5
2.2
18.1
19.8
FY17E
7173.1
18.1
19.7
27.6
42.7
1.9
19.2
21.5
9.5
6.5
35.8
124.7
3.3
Page 21
Risks and concerns

50
40
31.9
30
20
10
9.4
33.1
22.6
34.8
39.9
42.4
44.5
23.8
6.4
4.5
-0.2
0
-10
FY09 FY10 FY11 FY12 FY13 FY14

Excise duty as % of sales
Volume growth (%)
Highly regulated sector and severe increase in excise duty to hurt volume
The liquor distribution business in India is subject to strict regulations.
The rules and regulation vary in different states. Any change in policies by
the respective state governments with regard to production, distribution
or marketing of beer can impact the operational performance of the
company. Also, constant increase in excise duty and other levies by the
state government can impact the volume growth as well as the financial
performance of the company.
Increase in raw material and packaging costs

Barley prices have always maintained their uptrend, thereby leading to
cost pressures. Further, another major cost component is glass bottles.
Any change in government policy on glass bottles (like the Maharashtra
government banned the reuse of old bottles) will have a significant impact
on the financials of the company.
Inability to take price hikes

In majority of the states, price hikes are decided by the government. If the
company is not granted price hikes or the price hike is insufficient to
cover for increased input cost, it can impact the margins of the company.
Pledging of promoter holding

As on September 30, 2014, the promoter holding in UBL stood at 74.8%.
In this, Heinekens share was 39% while the share of the Indian promoter
was 35.8%. Of the Indian promoters share, nearly 54% is pledged with
various lenders whereas none of the shares of the foreign promoter are
pledged. If the stock price declines significantly, the promoters may be
required to pledge more shares to maintain the margin requirement. In
case of a default either in margin maintenance or interest payments, the
lenders have to offload the shares in the market, which can impact the
stock price negatively.
Exhibit 41: Share pledging trend of UBL (Indian promoter)
70
60
Dec-13
Mar-14
53.9
Sep-13
54.0
61.9
14.8
10
21.9
20
64.1
54.8
30
65.4
40
Jun-14
Sep-14
29.8
% Pledged
50
0
Sep-12
Dec-12
Mar-13
Jun-13
Page 22
Financial Summary (Consolidated)

Exhibit 42: Profit & Loss
(Year-end March)
Revenue
Growth (%)
Cost of materials consumed
Consumption of Packaging Material
Change in Inv, WIP & stock in trade
Employee benefit expense
Selling & promotional expenses
Other expense
EBITDA
Growth (%)
Depreciation
EBIT
Finance Cost
Other Income
Exceptional Item
PBT
Tax
Reported PAT
Adjustments
Adj. Net Profit
(| Crore)
FY14
4,229.7
8.5
637.1
1,071.5
23.4
264.1
1,174.6
470.9
588.1
23.3
197.8
390.2
79.5
24.4
0.0
335.1
108.7
226.4
0.4
226.0
FY15E
5,037.6
19.1
714.0
1,269.3
47.6
317.3
1,348.7
634.7
706.1
20.1
197.5
508.6
79.7
20.6
0.0
449.5
143.8
305.6
0.0
305.6
FY16E
6,075.1
20.6
861.0
1,530.7
57.4
382.7
1,602.5
765.4
875.4
24.0
218.8
656.6
84.5
28.8
0.0
600.9
192.3
408.6
0.0
408.6
FY17E
7,173.1
18.1
1,008.7
1,793.3
67.2
448.3
1,905.3
896.6
1,053.5
20.4
230.4
823.2
88.5
31.9
0.0
766.6
245.3
521.3
0.0
521.3
Exhibit 43: Balance Sheet
(| Crore)
(Year-end March)
Source of Funds
Equity Capital
Reserves & Surplus
Shareholder's Fund
Long term Loan Funds
Provisions
Total Current Liabilities
Short term borrowings
Trade payables
Other current liabilities
Provisions
Source of Funds
FY14
FY15E
FY16E
FY17E
100.5
1,606.7
1,707.2
527.6
5.5
1,576.5
488.9
209.7
785.6
92.3
3,898.1
100.5
1,874.2
1,974.7
474.8
5.5
1,706.2
521.6
217.3
869.4
97.8
4,242.5
26.4
2,231.7
2,258.1
427.3
5.5
2,070.7
629.1
262.1
1,048.5
131.1
4,843.0
26.4
2,687.8
2,714.3
384.6
5.5
2,441.2
721.6
307.1
1,259.0
153.5
5,626.9
Application of Funds
Gross Block
Less: Acc. Depreciation
Net Block
Capital WIP
Goodwill
Investments
Inventories
Debtor
Cash
Loan & Advance, Other CA
Total Current assets
Application of Funds
2,815.3
1,207.4
1,607.9
82.3
24.2
174.7
544.1
958.6
142.6
358.1
2,003.4
3,898.1
3,020.3
1,404.9
1,615.4
65.8
24.2
206.5
608.6
1,065.0
237.4
414.1
2,325.0
4,242.5
3,310.3
1,623.8
1,686.6
52.7
24.2
314.5
760.1
1,297.5
176.3
525.5
2,759.4
4,843.0
3,460.3
1,854.1
1,606.2
42.1
24.2
368.5
890.5
1,596.7
477.3
615.7
3,580.2
5,626.9
Page 23
Exhibit 44: Cash flow

(Year-end March)
Profit after Tax
Add: Depreciation
Cash Profit
Increase/(Decrease) in CL
(Increase)/Decrease in CA
CF from Operating Activities
Purchase of Fixed Assets
(Inc)/Dec in Investments
Others
CF from Investing Activities
Inc/(Dec) in Loan Funds
Inc/(Dec) in Sh. Cap. & Res.
Others
CF from financing activities
Op. Cash and cash Eq.
Cl. Cash and cash Eq.
(| Crore)
FY14
226.0
197.8
423.8
170.3
-232.4
290.6
-185.1
-35.4
61.5
-159.0
-215.6
0.0
23.3
-222.5
233.5
142.6
FY15E
305.6
197.5
503.1
129.7
-226.8
406.0
-188.5
-31.8
0.0
-220.3
-52.8
0.0
0.0
-91.0
142.6
237.4
FY16E
408.6
218.8
627.4
364.5
-495.5
496.5
-276.8
-108.1
0.0
-384.9
-47.5
-74.1
0.0
-172.6
237.4
176.3
FY17E
521.3
230.4
751.6
370.5
-519.8
602.3
-139.5
-53.9
0.0
-193.4
-42.7
0.0
0.0
-107.9
176.3
477.3
FY14
FY15E
FY16E
FY17E
64.6
5.4
8.5
16.0
1.0
74.7
9.0
11.6
19.0
1.4
85.4
6.7
15.5
23.7
1.9
102.7
18.1
19.7
28.4
2.5
13.9
5.3
2.4
29.1
51.3
11.2
14.0
6.1
2.6
28.0
49.0
10.0
14.4
6.7
2.9
29.0
49.5
10.0
14.7
7.3
3.2
29.0
52.0
10.0
13.2
14.3
15.1
15.5
17.1
18.6
18.1
19.8
21.3
19.2
21.5
25.1
95.0
12.6
38.0
5.3
72.8
11.3
32.6
4.6
54.5
9.9
26.4
3.8
42.7
8.2
21.7
3.2
0.6
4.9
1.7
1.3
0.9
0.5
6.4
1.4
1.4
1.0
0.5
7.8
1.2
1.3
1.0
0.4
9.3
1.0
1.5
1.1
Exhibit 45: Ratios

(Year-end March)
Per share data (|)
Book Value
Cash per share
EPS
Cash EPS
DPS
Profitability & Operating Ratios
EBITDA Margin (%)
PAT Margin (%)
Fixed Asset Turnover (x)
Inventory Turnover (Days)
Debtor (Days)
Creditors (Days)
Return Ratios (%)
RoE
RoCE
RoIC
Valuation Ratios (x)
PE
Price to Book Value
EV/EBITDA
EV/Sales
Leverage & Solvency Ratios
Debt to equity (x)
Interest Coverage (x)
Debt to EBITDA (x)
Current Ratio
Quick ratio
Page 24
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ratings to its stocks according to their notional target price vs. current market price and then categorises them
as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional
target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;
Pankaj Pandey
Head Research
pankaj.pandey@icicisecurities.com
ICICIdirect.com Research Desk,

ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No. 7, MIDC,
Andheri (East)
Mumbai 400 093
research@icicidirect.com
Page 25
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Initiating Coverage

December 23, 2014

Heineken brews heady growth!!!

YoY Growth (%)

Price to Book (x)

Market Cap (| cr)

Debt FY14 (| cr)

Cash FY14 (| cr)

52 week H/L (|)

Equity Capital (| Cr)

Research Analysts name

Net Profit (| crore)

Net Sales (| crore)

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Exhibit 2: Shareholding pattern Q2FY15

Source: Company, ICICIdirect.com Research

Exhibit 3: Chronology of United Breweries

UBL forays into brewing with

First bottled beer under the

Kalyani Breweries set up.

Acquires Empee Breweries. Enters

Acquires Associated Breweries

High range breweries set up in

Acquires GMR Vasavi, MP Breweries

Over the years, Heineken

Source: Company, ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

ICICI Securities Ltd | Retail Equity Research

The Beer story: Long way to go

Source: ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Exhibit 5: Growth in beer volume over past years

The beer segment posted healthy volume growth

Source: Technavia Report, ICICIdirect.com Research

Exhibit 6: India: fastest growing market in APAC region

Papua New Guinea

Source: UB presentation, ICICIdirect.com Research

Despite being one of the largest and fastest growing

Per Capita Beer Consumption

Source: UB Presentation ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Exhibit 8: Steady growth in per capita consumption for domestic market

Driven by a change in lifestyle and growth in disposable

Per capita Beer Consumption

Source: UB Presentation ICICIdirect.com Research

Beer consumption in India remains abysmally

Source: UB Presentation ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Urbanisation, enriched lifestyle to ramp up beer volumes

Beer Cases (In Million)

Exhibit 11: States with high beer consumption

Exhibit 10: Urbanisation picking up in key states

Source: McKinsey report, ICICIdirect.com Research

Source: ICICIdirect.com Research

Source: UB Presentation, ICICIdirect.com Research

Demography, lower dependency favour buoyant lifestyle

ICICI Securities Ltd | Retail Equity Research

Source: McKinsey Report, ICICIdirect.com Research, Household income in |1000

Exhibit 14: Consumer expenditure on alcohol

Source: Radico Khaitan presentation , ICICIdirect.com Research

ICICI Securities Ltd | Retail Equity Research

Disposable income has increased at a CAGR of

(|) Per Capita Disposable Income