>FMCG SECTOR (ANTIQUE)

The Alcohol Goliath

Investment Highlights
■ The Indian liquor industry, traditionally dominated by low-end country liquor, has shifted to IMFL (Indian Made Foreign Liquor).

■ The IMFL industry has grown at a higher rate, particularly during the last three years, led primarily by opening up of distribution in key markets in North India and banning of country liquor in the southern states.

■ Strong entry barriers, such as ban on advertising and restrictions on interstate movement of the products, have restricted the entry of global spirit players.

■ USL has continued to be the leading player in the IMFL industry with consistent volume share on a standalone basis of nearly 55% during the last four years.

■ The Indian beer industry has been witnessing steady growth of 8% CAGR per year over the last five years led by strong beer segment, which contributes approximately 63% of the total beer volumes in India. This has aided UB's leading position in the industry.

■ Indian alcoholic beverages poised for long term growth led by low per capita consumption, higher young and working population clubbed with increase in disposable incomes.

■ We initiate, coverage on United Spirits with a BUY recommendation and a target price of INR1,092, while coverage on United Breweries Ltd. with a HOLD recommendation with a target price of INR142.

To see the full report: FMCG SECTOR