Profits of the co. is not satisfactory for the last quarter, Results are below expectation, expenses has increased due to merger of various other distilleries and will be beneficial in FY13-14 as huge capex was also involved during acquisition. With increased borrowings Interest cost almost doubled as compared to quarter ended Dec 2010. Total income of the co. increased due to increase in other income whereas operational income decreased by almost 50% from 419.1mn during Q3FY10-11 to 214.3mn for Q3FY11-12.
United Breweries comes under tax bracket as that of United spirits, with less content of alcohol present in Beer it pays tax similar to that of 100% alcohol content, hence this adds to lower profits.
Considering the upwards movement of this stock from 410 to 455, it is not likely to sustain at those level as the results were against the shareholders expectation.
Also as per IIFL report the stock must trade at 404 considering the performance of the business and increased debt makes the co. more leveraged hence a decrease in sales would cause the profits of the co. to reduce to a greater extent. With Merger of various distilleries Fixed cost of the co. has increased and so the BEP in units for the co. has also increased.