United Spirits Q2 FY27 Earnings Call: Pins Double-Digit Hopes on 12% H2 Growth, Front-Loaded A&P Weighs on EBITDA (UNITDSPR)

United Spirits Ltd held its Q2 FY27 earnings call on October 28, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Steady Quarter with Front-Loaded A&P Weighing on EBITDA

• P&A NSV grew 6.3% in Q2 FY 2026-2027 — lapping 12.7% growth in Q2 FY 2025-2026; H1 FY 2026-2027 NSV growth stood at 7.8% (~8%, high-7s).
• EBITDA of Rs.643 crore, down 4.3% YoY — margin at 19.7% despite consciously front-loaded A&P; reinvestment rate was 11.6% of net sales vs 7.6% in Q2 FY 2025-2026, a 400bps YoY expansion.
• Reported PAT of Rs.462 crore, down 2.1% YoY — net profit margin at 14.2%.
• P&A price mix at 7.4% — driven by strong luxury/premium portfolio performance on healthy demand momentum in India 2 and India 3.
• ~Rs.50 crore of West Asia crisis cost impact absorbed in Q2 FY 2026-2027 — across glass, energy, packaging and logistics vs pre-March 2026 prices; management noted the supposedly temporary disruption is now business-as-usual.
• Brandy moved into the P&A segment — consumer MRPs in key states broadly aligned with lower prestige whiskey; Q2, H1 and prior-year comparatives restated.
• Macro headwinds persisted — prolonged West Asia crisis, softer monsoons and inflation kept consumer sentiment muted; the India 1 consumer shows fatigue from inflation while India 2 and India 3 remain robust.

Path to Double-Digit P&A Growth Runs Through H2

• Double-digit P&A growth aspiration for FY 2026-2027 reiterated — mathematically requires ~12% growth in H2 FY 2026-2027, driven by both volume and value, with volume playing "an absolutely important role."
• Maharashtra lapping should add 2-3 points — CFO Pradeep Jain said growth should reach ~9-9.5% from Q2 FY 2026-2027 levels in FY 2026-2027; the first MML brands entered the market around October (Q3 FY 2025-2026), with the lap completing from Q3 FY 2026-2027.
• McDowell's No.1 transformation reached 80-85% of salient markets ahead of the festive season — strong in West Bengal and Rajasthan, ahead of expectations in UP and Haryana, with acceptance concerns in conservative leader markets where agile interventions have been made; repackaged stock rollout runs roughly till end November 2026 (Q3 FY 2026-2027).
• Balance 2.5-3 points of the ~12% H2 requirement expected from McDowell's relaunch and innovation — though the CFO said it is too early to call whether McDowell's will reach 7-8% growth (period unspecified), noting the category has historically not grown at that level.
• Ex-Maharashtra H1 FY 2026-2027 revenue growth stood at ~10.3-10.5% — includes the Karnataka tailwind; price cuts flowing through the BII portfolio flagged as an additional H2 FY 2026-2027 tailwind.
• Karnataka P&A post-reform: volume up ~27-30%, value up 32-34% — CEO Praveen Someshwar called Karnataka's tax policy "very progressive"; slabs reduced from 16 to 8.
• Popular segment (~6% of Q2 FY 2026-2027 revenue) faced two policy headwinds — continuation of the Maharashtra adverse impact and the full impact of the Karnataka policy change; CFO said the largely McDowell's rum portfolio "may continue to dwindle further and probably die a natural death."

FTA Tailwind Offsetting NAS Inflation — For Now

• Gross margin expanded sequentially in Q2 FY 2026-2027 vs Q1 FY 2026-2027 — despite intensifying inflationary pressures, in contrast to sequential contraction at the other two listed peers (analyst observation); attributed to product mix and the FTA benefit.
• FTA concessional rates applied to all consignments from July 15th onwards (Q2 FY 2026-2027) — fully flowing into the P&L; management declined to quantify the benefit in basis points, citing confounding factors including currency depreciation, and will guide on the overall blended P&L instead.
• NAS will turn inflationary in Q3 FY 2026-2027 — driven by the poor monsoon and El Niño effect; management expects this to be offset by the full FTA impact, with gross margin expected to hold sequentially in Q3 FY 2026-2027.
• Beyond Q3 FY 2026-2027, management declined to guide on margins — CFO said the company would "ideally want to maintain gross margins at current levels" but will form a view as it goes along, responding to a question on compression risks from West Asia impact and glass pricing over Q3 FY 2026-2027 through Q1 FY 2027-2028.
• Lower wage and other expenses reflect the organization simplification drive — discussed during the Q1 FY 2026-2027 call; CFO advised tracking the trailing four-quarter run rate to arrive at the steady state rather than anchoring to a single quarter.
• Gross margin expansion attributed to category mix (premiumization), not state mix — Smirnoff's strong growth adds significantly to the mix; no quantified margin figure provided.

DRI Overhang, FSSAI Behind, RCB Sale Nearing Close

• DRI investigation: no new disclosure — management said it has been "very consistent in our classifications" (same HSN code for Scotch imports for the past 15-20 years), is cooperating with the DRI and the authorities, and is regulatory bound to disclose any additional development with a material impact; on a hypothetical adverse final outcome for the bulk portfolio, management acknowledged the impact "will be material."
• BIO portfolio will remain margin capped — CEO confirmed USL "will not get" the FTA benefit flow-through to its margin profile or cost lines.
• FSSAI disruption in Q2 FY 2026-2027 "completely behind us" — extended plant visits by FSSAI officials diverted organizational bandwidth and temporarily disrupted supply momentum; the CFO noted it is "very difficult to quantify" the split between primary sales and consumer offtake impact.
• RCB stake sale: long stop date runs to mid-December (FY 2026-2027) — Competition Commission of India has approved the deal; BCCI due diligence is at an advanced stage and management expects to close by the extended long stop date; no timeline offered for the associated dividend payment.
• FTA price-reduction leg still landing — excise cost cards submitted, some states approved; consumers should see lower prices on imported products within ~30 days (by ~end November 2026, Q3 FY 2026-2027), with elasticity to be gauged over the next 3-4 months (into Q4 FY 2026-2027); management is not factoring in adverse state action on excise revenue protection.
• Tamil Nadu: management declined to speculate on reform timing — CEO said he is "optimistic" about how the market unravels; if it opens, the CFO cited the Andhra Pradesh playbook (up and running in ~45 days from policy announcement) as evidence of readiness.

Smirnoff Scaling, RTD Bets, J&B Relaunch on Plan

• Smirnoff trademark firmly on track for Rs.1,000+ crore NSV in FY 2026-2027 — two new flavors (Kacha Mango, Coffee Toffee) launched, adding to Minty Jamun and Mirchi Mango; the flavors run-rate has been established since Q4 FY 2025-2026 with three quarters delivered through Q2 FY 2026-2027.
• Overall vodka category NSV expected to top Rs.1,000 crore in FY 2026-2027 — citing consistent quarter-on-quarter healthy growth over the last nine months; management will evaluate playing Smirnoff up and down the price ladder as vodka scales (already present in deluxe).
• Smirnoff Ice RTD launched at 4.8% and 8% ABV — rolled out in Goa and Mumbai with Bengaluru imminent, targeting beer and wine occasions; rollout began in 3 markets to perfect the chilled-availability playbook; management cited a 3x multiplier whereby an RTD drinker graduates to become a core spirits drinker, and intends for it to deliver serious numbers 2-3 years down the line (~FY 2028-2029 to FY 2029-2030).
• J&B relaunched as a 100% Scotch proposition enabled by the India-UK FTA — executed on plan after 9 months of preparatory work, available across roughly 60% of the country (salience); as a Diageo global trademark, the relaunch will be within the 10% margin cap.
• X Series range being renovated — the overall portfolio is being re-looked, with the refreshed go-to-market to be revealed shortly.
• Whites category seeing "explosive growth" — vodka and tequila growing strongly across the price ladder, with Smirnoff positioned at the top end and premium to most players (Q2 FY 2026-2027 trend observation, no numeric target given).

Festive-Quarter Leverage, But Guidance Hedges Abound

• Festive season relatively delayed in FY 2026-2027 — due to East India puja timing; October–December (Q3 FY 2026-2027) to capture the full benefit of festive demand, with the organization geared up for the festive quarter.
• FY 2026-2027 full-year ad spend guidance of ~11% for the core portfolio reiterated — spend on new platform launches (RTD, Smirnoff Ice) will sit on top of the 11%; management expects the 11.6% Q2 reinvestment rate to be the new normal for FY 2026-2027.
• Momentum rebuilding through September (Q2 FY 2026-2027) and October (Q3 FY 2026-2027 to date) — management noted it had guided at the May 2026 annual investor call that H1 FY 2026-2027 would be a little lower and H2 higher: "the script is playing out in line with our expectations."
• Maharashtra "in good play" and will get back to growth in FY 2026-2027 — but the CEO declined to commit to a specific 7-10% growth rate; the lower-prestige segment is expected to return to growth in FY 2026-2027, also without a quantified number.
• Competition described as healthy, not a slippage risk — CEO said the company plans to defend its number two position through disciplined consumer engagement and category play across international whiskey, Indian whiskey, vodka and tequila; he did not comment on acquisitions.
• Key watch items — NAS inflation vs FTA offset in Q3 FY 2026-2027, state excise responses to BIO price cuts, McDowell's acceptance in conservative leader markets, and the DRI outcome.