Analyst Abneesh Roy Names United Spirits Top Pick, Cites Strong Fundamentals and Future Growth

Abneesh Roy, Executive Director of Nuvama Institutional Equities, has expressed a strong bullish stance on United Spirits, designating it as his top stock pick with expectations of a new all-time high within the next year. Roy's positive outlook is supported by several key factors. Firstly, the company is showing robust performance in markets such as Karnataka and Andhra Pradesh, which is effectively offsetting a slowdown in Maharashtra. Secondly, United Spirits has achieved multi-quarter highs in both gross margins and overall profitability. Thirdly, the cost outlook for crucial raw materials, specifically Extra Neutral Alcohol (ENA) and glass, appears stable for the upcoming twelve months. Finally, a forthcoming tax adjustment in the United Kingdom scheduled for fiscal year 2026-27 (FY27) is projected to benefit the company. Additional positive influences include the new managing director's focus on operational execution and the potential to unlock value from the company's Indian Premier League (IPL) franchise.

In contrast, Roy described other fast-moving consumer goods (FMCG) companies, including Dabur India and Hindustan Unilever, as primarily 'fourth-quarter recovery stories,' still navigating the impacts of Goods and Services Tax (GST) transitions. For Pidilite Industries, he acknowledged its consistent growth but noted a lack of valuation comfort. Regarding ITC, Roy anticipates margin recovery in its cigarette segment in Q4FY26 due to falling leaf tobacco prices, but highlighted that the upcoming taxation policy in December is a critical factor. He rates the current 6% cigarette volume growth as positive.

Roy remains optimistic about the broader alcoholic beverage sector, noting its potential for growth driven by higher disposable incomes, benign raw material costs, the UK tax benefit, and continued strong performance in Andhra Pradesh.

Impact This news could significantly influence investor sentiment towards United Spirits and the broader alcoholic beverage sector, potentially driving stock prices higher if the analyst's projections are considered credible. It also provides valuable comparative analysis for investors tracking the FMCG space. Impact rating: 7/10.

Difficult Terms: Extra Neutral Alcohol (ENA): A highly pure form of ethanol used as a base for alcoholic beverages and other industrial applications. Gross Margins: The profit a company makes after deducting the costs associated with making and selling its products (cost of goods sold). Overall Margins: Refers to profitability across all operations, encompassing gross, operating, and net margins. Goods and Services Tax (GST): A comprehensive indirect tax levied on the supply of goods and services across India.