United Breweries shares gains 7 per cent on Heineken, ups stake

The Shares of United Breweries (UBL), boosted by about 7 per cent on Tuesday (25th August) morning session, in response to the media news of “Heineken is seeking to raise its stake in UBL to gain full management control." The stock closed at Rs 830.25 on Monday (24th August) and touched a day high of Rs 888.40 on Tuesday in the Bombay Stock Exchange (BSE).

Heineken is the number one brewer in Europe and the number three brewer by volume in the world. It has its presence in 178 countries across the world. Heineken operates in over 70 countries thus signifying a broader reach with respect to its customers.

Heineken took the first step in 2008 by acquiring 37.25 per cent stake in UBL. Over the years the company has increased its stake in UBL and currently it holds a 42.07 per cent shareholding in UBL. Further, as per the media reports, Heineken plans to take the holding beyond 50 per cent by buying shares from Vijay Mallya and his group firms.

UBL is based in India and engaged in the manufacture & sale of beer, including licensing of brands. The Company’s flagship brand is Kingfisher and it has achieved international recognition consistently and has won many awards in the International Beer Festivals. Kingfisher Premium Lager beer is currently available in 52 countries and leads the way amongst Indian beers in the International market. It has been ranked amongst the top 10 fastest growing brands in the UK.

UBL recently declared its June quarter results. UBL reported a 3.85 per cent year on year increase in revenue, which stood at Rs 1500.14 crore in Q1FY16 compared to Rs 1444.58 crore in Q1FY15. The company's EBITDA rose by 4.70 per cent to Rs 264.41 crore in Q1FY16 on an annual basis. While, its net profit declined by 4.68 per cent to Rs 122.81 crore in Q1FY16 as compared to the same period of previous financial year. The net profit margin of UBL contracted by 73 basis points to 8.19 per cent in Q1FY16 on an annual basis.

UBL's shareholding pattern indicates that FII holdings stood at 17.85 per cent and DII holdings stood at 1.94 per cent as on 10th July 2015.