United Spirits Ltd (UNITDSPR) Q2 FY27 Results Analysis: PAT Slips 7.67%, EBITDA Margin Compresses 132 bps

United Spirits Ltd's Q2 FY27 numbers came in mixed, with revenue of Rs. 7,014.00 Cr (-2.57% YoY) and PAT growth of -7.76% YoY. Here's a quick read of what worked, what to watch, and what management said.

Quarter Snapshot

Q2 FY27 was a mixed quarter: net segment revenue grew 2.87% YoY and gross margin expanded 92 bps, but a deliberate A&P step-up to 11.67% of net sales drove normalized continuing PAT down 7.67% and EBITDA margin down ~132 bps to 19.70%, still inside the guided band. The pending Rs.16,663 Cr RCSPL sale (BCCI approval awaited) and a debt-free Rs.3,748 Cr liquid balance sheet with 1.49x CFO/PAT conversion remain the key forward catalysts.

Key Investment Insights

Key Positives

• Beverage-alcohol net segment revenue grew 2.87% YoY to Rs.3,264 Cr and 20.53% QoQ; H1 net segment revenue up 4.37% YoY
• Gross margin expanded 92 bps YoY to 48.04% despite flagged input-cost headwinds, aided by the FTA bulk-scotch tailwind
• EBITDA margin of 19.70% is inside the guided mid-to-high-teens band, rebounding ~386 bps QoQ from 15.84% in Q1
• H1 CFO/PAT of 1.49x with FCF of ~Rs.994 Cr on capex of Rs.114 Cr
• Liquid resources of Rs.3,748 Cr against borrowings of just Rs.4 Cr — effectively debt-free, ahead of Rs.16,663 Cr RCSPL sale proceeds
• Employee benefits leveraged down to 4.69% of net segment revenue from 5.64% YoY

Risk Factors

• Normalized continuing PAT declined 7.67% YoY as A&P spend stepped up to 11.67% of net sales from 7.60% YoY (Rs.381 Cr vs Rs.241 Cr)
• EBITDA fell 3.60% YoY to Rs.643 Cr with margin compressing ~132 bps to 19.70% against a 21.02% base
• Reported profit fell 7.76% YoY to Rs.428 Cr, dragged by a Rs.(32) Cr after-tax discontinued-ops (RCSPL) loss
• RCSPL sale completion missed the guided September–October 2026 window; BCCI approval still awaited
• FY27 target of profit growth ahead of revenue growth not yet demonstrated (H1: profit +1.14% vs revenue +0.88%)