Geojit Investments has downgraded United Spirits Ltd to a HOLD recommendation from BUY, setting a target price of Rs. 1,580 against the current market price of Rs. 1,432, implying a 10% upside potential. This assessment follows robust Q2FY26 results, with consolidated revenue surging 7.9% year-over-year to Rs. 7,199 crore, propelled by re-entry into Andhra Pradesh, premium portfolio strength, and favorable base effects. EBITDA margins expanded 170 basis points to 9.2%, while profit after tax climbed 36.1% to Rs. 464 crore. However, policy headwinds like Maharashtra's tax hikes temper optimism, alongside stabilized commodity inflation and festive demand tailwinds. Investors should eye support at Rs. 1,271 (52-week low) and resistance near Rs. 1,700 (52-week high), with strategic entry below Rs. 1,400 for medium-term accretion.

Robust Q2FY26 Performance Ignites Momentum

United Spirits Ltd, Diageo's Indian powerhouse and global No. 2 spirits player by volume, showcased resilient quarterly growth amid sector tailwinds.

Net sales, excise-exclusive, ascended 11.6% to Rs. 3,173 crore, with the prestige and above (PA) segment—89.6% of mix—expanding 12.4% to Rs. 2,840 crore on blockbuster brand executions. The popular segment, fueled by McDowell's X-series rum and vodka, grew 9.2% to Rs. 278 crore, underscoring broad-based demand revival in pivotal states.

Prestige Portfolio: The Profitability Engine

PA segment dominance fortifies United Spirits' margin trajectory, with brands like Godawan single malt clinching over 100 global awards in under two years—a prodigious feat.

Smirnoff notched double-digit gains, bolstered by novelties like Jamun and Mango flavors gaining traction in Uttar Pradesh and Haryana. Management's 360-degree campaigns, amplified by celebrities Kartik Aaryan and Vijay Deverakonda, have supercharged brand equity, sustaining advertising spends at 9.5-10% of revenue.

Financial Fortifications and Projections

Geojit's revised forecasts project steady topline expansion: FY26E sales at Rs. 28,871 crore (5.8% growth), EBITDA at Rs. 2,528 crore (8.8% margin), and adjusted PAT at Rs. 1,903 crore yielding Rs. 26.2 EPS.

FY27E anticipates Rs. 30,518 crore revenue, 9.2% EBITDA margins, and Rs. 28.6 EPS, valuing at 55x FY27E for the Rs. 1,580 target. Balance sheet robustness shines with Rs. 2,030 crore cash reserves, zero debt, and ROE steady at ~20%, underpinned by productivity gains and premiumization.

Strategic Pillars Amid Policy Perils

Festive fervor and AP recovery propel H2FY26 optimism, with retail sales value accelerating 18-25% post-price hikes, signaling consumer resilience.

International channels, including duty-free and UK, align for uplift. Yet, Maharashtra's draconian tax escalation looms as a profitability saboteur, prompting Geojit's cautious HOLD pivot from prior Rs. 1,530 BUY target.

Stock Levels and Investor Roadmap

For traders, technical scaffolding delineates clear inflection points: robust support at Rs. 1,271 (52-week trough), pivot around Rs. 1,432 CMP, and overhead resistance at Rs. 1,700 apex.

Accumulate on dips below Rs. 1,400 targeting Rs. 1,580 (10% yield), with stop-loss at Rs. 1,250 to mitigate volatility. Long-term investors, buoyed by 0.9% dividend yield and beta of 0.8, should pare exposure if PA momentum falters below 10% growth. Promoter holding steady at 56.7%, FIIs at 14.4%.

Valuation Vignette and Peer Context

At 55x FY27E EPS, United Spirits trades at an EV/EBITDA premium of 40.6x FY26E versus historical 44.5x, justified by premiumization but vulnerable to regulatory zephyrs.

Market cap stands at Rs. 104,153 crore, enterprise value Rs. 102,568 crore. Relative underperformance versus Sensex over 6/12 months (-11.7%/-12.1%) underscores entry allure for contrarians eyeing 5-6% CAGR through FY27.