A major brewing company has halted its beer supply to the state-owned beverage corporation in Telangana, citing mounting financial pressures. The decision comes as the corporation faces criticism over long-standing price stagnation since 2019-20 and substantial payment backlogs, making continued business operations unsustainable in the region.
Share Price Movement
The share price of United Breweries Limited fell 7.52% percent to Rs. 1,919 per share on Wednesday, an increase from its previous close of Rs. 2,075 per share. The market capitalisation now stands at approximately Rs. 52,788 crore as of January 08, 2025.
What’s Driving the Price?
The company has suspended beer supply to Telangana Beverages Corporation Limited (TGBCL) due to no price revision since 2019-20 and significant unpaid dues, making continued supply financially unviable.
The Telangana State Beverages Corporation Limited (TSBCL) manages the purchase, distribution, and sale of alcoholic beverages in Telangana. It ensures regulatory compliance, fosters supplier relationships, generates revenue through excise duties, and supports public health awareness initiatives.
Financial Highlights
According to its recent filing, in the quarter ending September 2024, United Breweries’s consolidated revenue from operations has increased by 12 percent YOY from Rs. 1,890 crore in Q2 FY24 to Rs. 2,117 crore in Q2 FY25 and decreased by 14.46 percent QoQ from Rs. 2,475 crore in Q4 FY24.
The company’s consolidated net profit has increased by 23.3 percent YoY, from Rs. 107 crore in Q2 FY24 to Rs. 132 crore in Q2 FY25. As compared to the last quarter of 2025, the company’s net profit has decreased by 24.13 percent QoQ from Rs. 174 crore.
The average price-to-earnings (P/E) ratio in the breweries & distilleries and supply industry is 42.92, which is less than United Breweries’s current P/E ratio of 111.56.
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Market Outlook
The Indian beer industry is on the rise, with beer comprising around 10% of total alcohol consumption in the country. While the per capita beer consumption in India is only about 2 litres, compared to the global average of 30 litres, there is a notable shift towards premium beers. Premium beer is expected to grow faster than the overall category.
Despite challenges like high taxation and regulations, the market presents abundant opportunities for innovation and growth, with companies that align with consumer trends poised for success.
Shareholding Pattern
As of the September 2024 shareholding pattern, United Breweries Limited is primarily held by the promoters at 70.84 percent, foreign institutional investors hold 6.26 percent, and the public with 5.13 percent. Furthermore, the government holds a 1.16 percent stake in the company.
About Company
United Breweries Limited (UBL), headquartered in Bangalore, has been a major player in India’s beverage sector since 1857. Known for Kingfisher beer, UBL holds over a 40% market share and offers a variety of alcoholic and non-alcoholic drinks. It expanded through acquisitions and diversification, with a significant boost in 2021 when Heineken N.V. increased its stake to 61.5%. Under CEO Vivek Gupta, UBL focuses on sustainability and community-driven initiatives, poised for growth in both beverage sectors.
Written By Fazal Ul Vahab C H
Disclaimer
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