United Spirits Q1 Profit Falls 13.7% on Higher Costs, Compensation Payout

United Spirits Ltd. reported a 13.7% drop in net profit to ₹2.6 billion for April–June, hit by higher advertising and other expenses, payouts to Royal Challengers Bengaluru fans after a stampede in the city, and employee severance costs.

Despite higher sales volumes, the alcoholic beverage maker’s net sales value — which excludes taxes and other levies — rose 8.4% on year to ₹25.5 billion. Revenue from operations, which includes taxes, remained flat at ₹58.2 billion.

Growth in net sales was driven mainly by the company’s re-entry into Andhra Pradesh under a new liquor policy, supported by revamped products and management interventions. Excluding the Andhra Pradesh boost, sales were hurt by a high base from last year, when the company had pre-emptively built inventory ahead of the 2024 general elections.

Total sales volume rose 9.4% on year to nearly 15 million cases, with mass-market products leading the growth. Sales volume of lower-priced popular brands rose 11.6% to 2.4 million cases, while prestige and above brands grew 9% to 12.6 million cases.

In value terms, mass products’ net sales rose 13.6% to ₹2.5 billion, outpacing the 9% growth in premium and luxury products to ₹22.5 billion. The product mix weighed on revenue growth at the pre-tax level.

The company continued to step up brand spending, with advertising and promotion expenses surging 36% to ₹2.4 billion and other expenses up 18.6% to ₹3.3 billion. Input costs rose 8.9% to ₹11.9 billion, taking total expenses 13.6% higher at ₹22.5 billion.

Exceptional items of ₹110 million further weighed on earnings, comprising ₹80 million in severance costs and ₹30 million in financial aid to the families of fans who died in the IPL victory celebrations stampede.

EBITDA fell 9.4% to ₹4.2 billion, with margins slipping to 16.3% from 19.5% a year ago. Gross profit margin eased to 44% from 44.5%.