United Spirits is on a high after RCB's IPL win, JP Morgan upgrade and UK FTA. Can it keep buzzing?

Mumbai, June 6, 2025 – United Spirits Ltd (USL), the country’s largest alcoholic beverage company and a subsidiary of global liquor giant Diageo, has been enjoying a spirited rally on the stock market, fuelled by a confluence of positive developments. From Royal Challengers Bengaluru's (RCB) fairy-tale IPL triumph to a bullish upgrade by JPMorgan and a promising Free Trade Agreement (FTA) between India and the UK, the stock has gained over 8% in the past week. Investors are now asking the key question: Can the buzz last?

IPL Victory Spurs Sentiment

The RCB brand, partly owned by United Spirits, clinched its maiden Indian Premier League (IPL) title this season, ending years of heartbreak for fans. This landmark victory has triggered a wave of brand goodwill for USL, which has long leveraged its association with RCB through branding and merchandise.

“RCB’s IPL win is not just a sporting milestone; it's a branding jackpot,” said Manish Jain, FMCG analyst at Mirae Asset. “The emotional resonance with fans will likely translate into increased visibility and merchandising revenue for USL, especially during the upcoming festive season.”

While the direct financial contribution of the IPL team to USL's bottom line is modest, the intangible brand equity uplift is substantial, especially for premium product categories.

JPMorgan Turns Bullish

Adding to the cheer, JPMorgan has upgraded United Spirits from "Neutral" to "Overweight," citing strong premiumization trends, robust distribution expansion, and improving margins. The global brokerage firm has also raised the target price to ₹1,200 from ₹1,000, indicating an upside potential of nearly 15% from current levels.

In its note, JPMorgan stated:

“United Spirits is at an inflection point where premiumization is no longer just a buzzword. We expect premium and prestige segments to contribute over 60% of revenue by FY27, enhancing margin resilience.”

The company has also seen operational efficiency improve due to enhanced supply chain digitization and SKU rationalization, which have improved EBITDA margins over the past two quarters.

UK-India FTA: A Global Lift

Another key catalyst for the stock's recent rally is the nearing finalization of the UK-India Free Trade Agreement. As a Diageo-owned entity, United Spirits stands to benefit from relaxed trade barriers and improved access to premium international spirits at lower costs.

According to industry insiders, the FTA could significantly reduce import duties on scotch and other premium liquor brands, paving the way for product expansion and cost synergies.

"Diageo can more seamlessly integrate its global portfolio with United Spirits’ Indian operations," noted Aditi Rao, Senior Economist at Edelweiss. "This enhances USL's competitiveness against local and imported brands alike."

Financial Snapshot and Market Performance

As of the June 6 closing bell, United Spirits' stock was trading at ₹1,046, marking a 52-week high. The company's Q4 FY25 earnings showed a 12% year-on-year increase in net profit at ₹347 crore, while revenue grew by 9% to ₹3,019 crore.

Key performance highlights:

• EBITDA margin: 17.8% (vs 15.4% YoY)

• Prestige & Above segment growth: 13%

• Reduction in debt-to-equity ratio: 0.4x

These figures affirm USL’s strategy of focusing on high-margin segments while optimizing operating costs.

Challenges on the Horizon

Despite the optimistic outlook, analysts caution against excessive exuberance. The Indian alcobev sector is still heavily regulated, with state-wise policies creating compliance burdens. Moreover, inflation in input costs—especially glass, ethanol, and packaging—remains a concern.

“While the stars are currently aligned for USL, sustained momentum depends on execution and macro stability,” said Ankur Mehta, Research Head at Motilal Oswal. “Volatility in raw material prices and ad hoc taxation by states can impact margins.”

Investor Outlook: Cheers or Caution?

With multiple tailwinds—branding, brokerage confidence, and international trade leverage—United Spirits is well-positioned to extend its rally, say market watchers. The broader market sentiment also remains buoyant, with Nifty FMCG index outperforming the benchmark.

Short-term traders are advised to watch resistance levels around ₹1,100, while long-term investors may consider accumulating on dips, especially if the FTA gains formal legislative approval.

“We remain constructive on USL for the medium-to-long term. It is emerging not just as a beverage company but as a lifestyle brand,” concluded Deepika Khandelwal, Consumer Sector Lead at HDFC Securities.

As the spirits industry in India matures, United Spirits seems to have found the perfect blend of brand visibility, market strategy, and global leverage. Whether the buzz continues will depend on its ability to capitalize on these momentous wins—on and off the cricket field.