United Breweries Ltd (NSE: UBL) Q3 2026 Earnings Call dated Feb. 11, 2026
Corporate Participants:
Jorn Elimar Kersten — Chief Financial Officer
Vivek Gupta — Chief Executive Officer
Analysts:
Abneesh Roy — Analyst
Harit Kapoor — Analyst
Krishnan Sambamoorthy — Analyst
Ajay Thakur — Analyst
Himanshu Shah — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to The United Breweries Limited Q3 FY 2026 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing Star then zero on your Touchstone phone. I now hand the conference over to Mr. Yawn. Thank you. And over to you sir.
Jorn Elimar Kersten — Chief Financial Officer
Yes, thank you very much. Good afternoon everyone. Thank you for joining the call. For update on the previous quarter ending December 31, 2025, Silic and I are happy to give you an overview of the performance as well as answer some of the questions that you may have as a few introductory remarks. This quarter, United Breweries delivered resilience and agility with improved margins and we continued our premium growth while in the industry. We still need to navigate some headwinds related to both weather as well as challenges in affordability and I think we’ll speak some more about that later as well. For the quarter we did see net sales growing at 4%, largely driven by price increases in key states like for instance earlier in the year, Telangana, Rajasthan as well as Uttar Pradesh, as well as the impact from localization of premium supplies, a source mix and a favorable state mix where we saw some more profitable states ahead in terms of rural development.
All of this, together with operational efficiencies that we’ve been able to materialize, allowed us to achieve a margin of 45.3% which marks more than 220 basis points improvement over the previous year. And you can imagine this is quite a nice green shoot as it’s the highest gross margin performance that we’ve delivered over the past three years. That also supported the in the quarter ebitda growth of 86% in Q3, which is also a pretty good recovery from the quarter before now. Earlier this year we launched our productivity and cost effectiveness programs which include strategic initiatives around reorganizing our key business functions, optimizing our brewing presence, localizing and further simplifying our portfolio, as well as driving other cost efficiencies in the margin expansion.
We see some of the early benefits of these initiatives translated into the P and L and the margin expansion. Now, for the longer term, we still believe that sustained investments in brands are essential to building the brand equity and shaping the category in India, so we will continue to invest in our brands and a testament to this is that the UBL portfolio brand power has been the highest in two years time on the numbers reported over the last quarter. Also, we want to accelerate innovation and our newest offering, Kingfisher smooth, launched in January 2026 and is really set up to support category growth and expand our presence in a strong beer segment.
We currently launched it in Rajasthan and Kanapka and excited about the prospects that. We see in the first few weeks of this innovation. With these investments and innovations as well as our commitment to invest some of the savings and efficiencies in into our brands into our portfolio, we are very much committed to continue our journey as the beer category maker in India. On the regulatory front, we look to that it remains a very mixed landscape. While we see some positive developments in Maharashtra as well as in Magaya which support their affordability, changes in pricing and duty structures in other states continue to have their own challenges. So that remains a mixed bag. Now if we look ahead, we will as always remain focused on building and shaping the category.
We continue to drive premiumization as we’ve done in 2025 and looking forward to strengthening our bank portfolio as well as advocating for equitable taxation here. With the programs underway, we continue to manage our costs proactively, including optimization of our network and we also, as we’ve been repeatedly mentioning here as well continue to invest in the capabilities to make sure that UBL is positioned for sustainable long term growth. I’m sure there’s a few questions before we move to the Q and A part. I’d like to hand over to Vidak for some introductory remarks from his side.
Vivek Gupta — Chief Executive Officer
Thanks John and thank you everyone for joining. As Jan said, it was a very resilient and agile quarter. I think for me the most important is the directions in the numbers, but more than the quantum of the numbers because this is a reflection of all the hard work that is happening over the last few quarters and the structural interventions we were making on the business in which we are all nicely coming together. We talked in the past about we are localizing our premium business and if you remember I mentioned that by September we would be done in almost eight more breweries of localization.
That impact has started hitting coming nicely on the margins. We have we have also looked at better return bottles. The operational work which we did on that there’s a lot of work happening on organization design, on productivity, on sourcing, on making sure our network design choices are coming together. We also we were caught in the middle of last quarter, especially with the rain, especially August end and all and we had already made investments which we didn’t want to pull, which in the hindsight was the right call because our brand power is the highest in the last three years.
And we did took some strategic calls in the last quarter knowing where the category is getting impacted and affordability issues are not going away. To repurpose our investments in both the state mix and all, our number one priority remains to drive category growth. I’m very proud of the organization because we accelerated many things. We accelerated our, I would say the blockbuster innovation of Kingfisher song Smooth, which is the innovation on the main theme and first major innovation on the mainstream which will drive the category growth which will drive which is at a better margin versus Kingfisher strong for us both in terms of pricing and overall value.
We think it will not only improve our substitute, but also by seda, that new user designed for the young consumers who are looking for less bitter. We accelerated that innovation to two states, you know, with a very, very complete asset. The product is, you know, the competition, but also has a very high power. The other thing, what we have done is we have done a lot of organization capability work to streamline things like for example customer service logistics, making sure we significantly improve consistency of beer, we improve the storage, we investing in the seasons, on the preparation of supplies.
You know, despite having planned shortages, we work very actively. The category has two challenges. I think number one challenge continues to be the affordability. I think we are in the key states like in Karnataka the category declined 17% in Rajasthan, declined 5% in Telangana declined double digits, that’s been all declined. And I think we are continuously working through the association of India and with the regulators to show them the data. And we have seen some green shoots with couple of state governments coming with the policy and not taking taxation on beers. But there’s a lot more to be done there.
The second challenge of course is weather and we are hoping that the summers are near us and we’ll see how those impact happen. We are going through an inflationary environment as well, especially on aluminium prices which will impact cans and barley prices will also be there. So we are also very conscious that cost of sales will increase. So. So our productivity program could not have come at the right time. And it’s not one time activity. It is a routine excellence what we are trying to do in our sourcing in our processes and inefficiencies in a wastage. And I think we were very glad as a management team, as a company to see some of those efforts coming in the financials, you see. So I’m not too. I don’t want you Guys to get too excited by the absolute numbers and the extent of the change. But what we are saying is directionally we are in the right direction, which is we’ll go the category, improve the margins and we will fund the growth and will be very aggressive.
And many of you would have seen our execution in women’s Senior league where for the first time we become market sponsor and we, you know, the Kingfisher brand is really great and at the same time our premium portfolio, Hennequin, Henneken, Silver, Amsel, Brandy, Ultra Ultra Max continue to have the momentum and the strong plans of the need. So happy to answer any questions at this point of time.
Questions and Answers:
operator
Sure. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press Star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles to ask questions. Please press Star and one. The first question is from Avnish. Roy from Nuvama. Please go ahead.
Abneesh Roy
Yeah, thanks. My first question is on the margin surprise. And congrats for that. And you have also done non core asset monetization of land also. So I wanted to understand what will be the competitive intensity given Vera kind of player clearly in terms of presence has gone down significantly. Do you see that as a cost. Advantage in terms of advertising trends?
Vivek Gupta
Oh, actually we are seeing the competitive intensity quite high because you know when volume the category is not growing volume, it’s a tough time. Everyone wants a pie on a high fixed cost business. So I think as I said that many times that our focus is on category growth. Actually we feel that more spend in the category will actually help to drive category growth because the number one thing we need is to get back to growth on volumes in the category. We have seen a lot of competitive intensity from the local players, some of the other global competitors.
In some cases we are seeing some spend from the competitors which are basically buying volumes at our thing. But we don’t want to get into that trap. But having said that, I think it is very competitive. But we really hope that this drives into category growth. I don’t mind us losing shares if the category is going up but it’s not a healthy sign if the category is declining. And I think the category must bounce back from this quarter. And that is why I think the intensity is there on Bira. If you actually see the Bira share is only 0.1 and it has never been a significant share.
It was big in couple of states but we don’t see much impact because of BIRA intensity. Coming up.
Abneesh Roy
I had a question on the specific states. So Maharashtra you have done quite well this quarter. My question is now that Maharashtra made liquor is ramping up and that’s more affordable to customer. Do you see that beer growth rate Maharashtra and the laggard states like Karnataka and Bengal soon we will see the favorable base lapping up. So do you expect a strong FY27 assuming season is normal? Because no one can predict season. But just because of the these two. States how do you see?
Vivek Gupta
Yeah, no, I think we want to continue to see the momentum in Maharashtra because as I said the category growth opportunity is huge in Maharashtra while MML impact we have to still see because it has come in and you know it’s very early days but we see a lot of opportunity in Maharashtra. We’ll be cycling that. I think Karnataka as you said has been the capital of beer for the capital state of beer. It has to bounce back in Karnataka and that’s why we are also confident and betting on our biggest innovation with Kingfisher Strong smooth we accelerated in Karnataka to help drive category growth.
We also have Heineken Silver and we have a full portfolio in Karnataka. You know this at least in January. The operational issues which were there last year on label registration and all were not there. So those are the positive signs in Karnataka. And at the same time we are working with a lot of other governments. I think the spend all policy was positive in December where there was a relative taxation of beers but better. So we’re hoping better. We’re hoping that selling on our visa Rajasthan, some of the other states also address the affordability issues of the relative pricing.
So I think there will be ups and downs. You know Jharkhand has been a bit positive based on their policy on privatization. So we should have to see. But yes, you know, you know as I said we are, we are positive but we have to see how much it bounced back because affordability is still a real issue. Like relatively it will improve but if the price remains where it is. So we have to just see that. But you’re right, there could be certain minus on this. But there are green shoots on category growth in January.
We are already seeing category coming back to 4 or 5% level in January. So that’s a positive sign.
Abneesh Roy
Last quick question. So you spoke about the aluminum can inflation but gross profit still is up versus the overall sales. So there is A gross margin expansion. So what has helped here and do you see this turning a bit more under pressure given the aluminum inflation? Second is other expenses around 4%. So anything sustainable in that line item?
Vivek Gupta
Sorry, the second question. Your voice was breaking.
Abneesh Roy
Other expenses. Other expense.
Vivek Gupta
Sorry, the voice was breaking. But let me answer the the first question, Avish. I think aluminum can is watch out. But if you see for United Brewery the strength is bottles and we actually work a significant amount of work we are doing to return bottles and that has really helped us on the gross margin expansion. The other thing is the state mix and where we produce and what we do on that. So we are building the francicing and the imports. We have to do into our plan that these will be the headwinds which may not lead to this level of margin expansion.
In our own estimate, like we got 220 basis point of margin expansion, we think 50% of it could be structural and we should continue to bring on that and many of these will have working on it. We also taken pricing on sand in the selective market wherever we can take because you know pricing is a lot of it driven. So there’s a plan, we are working on it.
operator
Thank you. The next question is from Harith Kapoor from Investec. Please go ahead.
Harit Kapoor
Yeah, so the first question was on the revenue bit. So you know you’ve seen almost a 5% realization improvement this quarter. How much of this is the pricing that you spoke about where you’ve been able to get some incremental pricing and how much of it is mix led? Because markets like, you know, West India specifically Maharashtra did well. Give us a sense of what proportion this is mix. What proportion? This is price.
operator
I’m sorry Harith, could you please repeat the question?
Harit Kapoor
Yeah, my question’s on realization growth which is almost 5% this quarter. How much of this was price and how much of this was mix? Some sense will help there. Thank you. That’s my first question.
Jorn Elimar Kersten
Yeah, Hari, thanks for the question. It’s approximately 50, 50 between price and mix where we see in pricing we see in some of the big volume states like Telangana and Rajasthan we have pricing from earlier in the year. On the state mix we see that Maharashtra and Karnataka mainly were ahead of the pack in terms of volume growth. So it’s a combination which pans out in approximately 50, 50 split.
Harit Kapoor
And you know, if you look at the earlier participants asked about gross margins. So I understand that part of it again is mixed led given that markets in the west have done well and Telangana and Rajasthan not so much but how much of this would you really attribute again to state mix, this sharp improvement of 220 basis points? Because once some of these other markets start to lap the decline and start to grow, we should see a more normalized gross margin. So this was coming from that angle.
Jorn Elimar Kersten
Yeah. So it’s a combination of things. Look, I think like Vivek mentioned, we’re very happy with the direction this has grown because we see in the margin extension that we recorded in the quarter, we see that part of it is also showing the green shoots of the initiatives that we did and the good performance as well. On, for instance, the bottle returns. If we look at. Sorry, are you still there?
Vivek Gupta
Can you hear us?
operator
Yes, sir, we can hear you.
Harit Kapoor
Yes. Okay, great.
Jorn Elimar Kersten
Yeah. So on the. If we look at the total of 220 basis points, we think that roughly 50% is underlying performance improvement, which is a combination of better return models, the local sourcing that we have in Andhra Pradesh, and as well the favorable state mix. So in that mix, I do think you could say that there’s a part also driven by the favorable statements. Obviously, we also try to drive that in terms of how do we push for our business to of course accelerate in the region where it’s more profitable versus others. But that remains a bit of a volatile thing.
Yeah, of course.
Harit Kapoor
And the return mix, maybe if you could give a sense of, say ytd, what that number is versus what it was last year, any kind of direction that you have in terms of just wanting to map your improvement, how it is kind of panned out.
Jorn Elimar Kersten
Yeah. So year to date we are at 36.7 new bottle infusion and it’s been a continuous growth story. So this is top of my head. I would say the sixth or seventh quarter in a row that we’re improving on bottle returns. So lowering the impact of new bottle infusion, despite the fact that we also continue to grow, especially on the premium side, and we’ve mentioned that before on these calls, that with the premium growth accelerating, we also need to get to significant share of premium in order to see the bottle returns also helping for premiums become value accretive.
We start seeing in some selective pockets in the markets, we start seeing some of the improvements coming through to the P and L. So I think that’s something that adds to what Vivek is saying. On direction, we’re very happy with how this is going because it means that structurally we’re improving the business. However, this is still very selective. But overall on bottle returns, I think we’ve done really good work and we continue to see the improvement and that also of course reflects in our ability to have return bottles on the premium segment.
Harit Kapoor
Great. And the last bit was, you know, as the earlier participant asked, Karnataka comes into the base from January, the data is now visible and even Rajasthan, Telangana. The impacts started to play out in. Quarter one, quarter two. So you’re lapping some of those kind. Of lowish bases as well. Do you believe that this 6, 7% industry volume growth trajectories is a reasonable ask going into FY27 after a fairly challenging year?
Jorn Elimar Kersten
I think on the longer term, yes. We still very much believe that that’s where the industry is heading and we do expect some acceleration both cycling some of these items that you mentioned as well as last year where we see the benefits of pricing in Telangana and Rajasthan but it has an impact on industry volume in these particular states as well as across other states. So that continues to be a bit of up and down. But in a longer term we still see that number. Short term we still see headwinds cycling their pricing. So that will take a few months as well as preparing for the season we did well last year.
So on the shorter term we see green shoots. We’re not there yet from a category point of view in that mid single digit sort of area of growth. But for longer term we still believe that’s where we need to be.
operator
Thank you. Before we take the next question, a reminder to participants that you may press star and one to join the question queue. The next question is from Krishnan Sabammoorthy from Nirmalbang Institutional Equities. Please go ahead.
Krishnan Sambamoorthy
Yeah, hi. My first question is regarding vesicular. What are the discernible benefits that you have witnessed so far in the areas where you roll this?
Vivek Gupta
Yeah, I think, you know, good question. I think as you said, we are consistently increasing our investment in the visiculars, I would say versus 2014. We have actually almost two and a half times more visicula in the market and we are seeing almost, you know, not only a category growth in those stores but also share growth for us in those stores. And I think there’s a lot of opportunity because the category, you know, the beer is sold cold and we have to continuously drive it.
But we are absolutely seeing positive momentum on the category and our shares in the stores where we are doing the review coolers and we are measuring it. Of course there is an impact of weather, affordability and you know, so we’ll have to see the data over a longer Period of time. But directionally, you know, we are investing more this year versus last year based on the positivity we are seeing on this.
Krishnan Sambamoorthy
Thanks, Vivek. How many stores do you have visiculus now in terms of number at the end of December?
Vivek Gupta
Yeah, we have in more than 35,000 stores here with equivalence.
Krishnan Sambamoorthy
Okay. My second question is regarding barley inflation. In the last quarter you had mentioned that you were expecting high single digit inflation. What is the latest view that you have here?
Jorn Elimar Kersten
Yeah, no real change on the barley. I think barley remains one of the important materials where we see some higher inflation on the other input materials. Actually we see pretty good developments. We feel good about the bottles. Like Vivid mentioned, we need to work watch out for aluminum. I think over the past couple of weeks, the global parts from aluminum we had quite a bit of an increase. So that’s something that we watch. I think we’re covered for the first couple of months and specifically maybe on both cans as well. On barley, a big part of our focus is on localizing supply.
So for Cannes, we still are looking at some imports for the year which we can hopefully cover with the help of partners in the years after. For barley, we’ve managed to completely localize the supply to India versus previous years where we also have to do imports which of course come at a price.
Krishnan Sambamoorthy
What’s the issue here on barley? From what I gather, the barley sowing so far has been ahead of last year’s level. So what is causing this inflation?
Vivek Gupta
It’s a MSP increase. Because as you know, the minimum support price in the key markets have gone up to do that and to encourage farmers, we usually pay slightly higher based on that. So I think it’s MSP and the inflationary increase that we are looking.
Krishnan Sambamoorthy
Okay, thanks a lot.
operator
Thank you. The next question is from Ajay Thakur from Anandrathi Securities. Please go ahead.
Ajay Thakur
Hi. Thanks for taking my question. So I wanted to understand more on the market share trend, how it’s been shaping up especially for us and in the key states like, you know, Maharashtra, Madhya Pradesh or some of the other major states. If you can just throw some light on that.
Vivek Gupta
Yeah, I think for the full 2025 we actually grew almost 90 basis point of national market share. So and not only that, we also grew I think around 180 to 200 basis point of premium market share. So our market share trends or the fully full year basis are there. There are going to be some fluctuations quarter by quarter because of these state mix where we have higher develop. But overall I think you know we are in the ballpark range of 48 to 49% market share as a company and as I said our biggest priority is to drive category growth again you know we are actually not talking market share among cars as much.
The key priorities. What Yong said we need to get to long term 6, 7% growth. We last year was tough because of the affordability as weather. We need to see how the weather holds up and how much impacts. So I think that’s where we are understood.
Ajay Thakur
And second question was on the Telemana what is the status of in terms of the receivables that we have over there and how much improvement are we seeing in terms of the receivable trends?
Vivek Gupta
We continue to face challenges in Telangana as an industry. I think we have got some good improvement in the past overdues which were there I think and that also the new overdues have increased. I think it’s a constant effort to work with the government and to bring the part. But I would say we are in a it’s a continuous range so I won’t say we are in a better position or there but this is something we need to work because the total exposure for us still remains the same.
Ajay Thakur
Okay, quite helpful, thanks.
operator
Thank you. The next question is from Himanshu Shah from Dalat Capital. Please go ahead.
Himanshu Shah
Thanks for the opportunity for a health question on our cost and product productivity effectiveness program. So the 3 to 6% savings that we are highlighting would this be the gross savings or net savings net of reinvestment number one. And this will be on FY25 revenue base. If you can just clarify this particular thing.
Jorn Elimar Kersten
Yeah. So we’re talking gross savings here that we aim to materialize over the next couple of periods. So the savings that we generate from these initiatives we expect to partially flow to the P and L And a significant portion is planned to be strategically reinvested so that we’re driving future growth, that we support the brands and we support optimization efforts. So this will include a wide range of investments. Take for instance to impact affordability of to make sure that we do the right brand building activities putting money behind innovations like now Kingfisher, smooth enhancing competitive positioning these type of things across our key markets to make sure that we continue to invest into long term growth.
So first and foremost we need this to be able to invest behind the growth and then we’ll see how well we versus new initiatives. But I think that’s the main driver from launching this is making sure that one we become more resilient in volatile environment. But two that we really generate funds to invest behind long term brand building.
Himanshu Shah
And the savings should materialize over what period of time frame?
Jorn Elimar Kersten
Between 2026 and 2028. So it’s a longer term program and you will hear us talk about this quite a bit, I think in coming calls because it’s also about structurally improving the business. It’s definitely not meant to be a short term knee jerk exercise. This is really about long term improving the business.
Himanshu Shah
Thank you. That’s it from my side and all the best.
Jorn Elimar Kersten
Thank you.
operator
Thank you very much. That was the last question in queue. I would now like to hand the conference over to the management team for any closing comments.
Vivek Gupta
No, thanks and thanks everyone for joining and asking questions. As you said, I think we are on a journey of being category makers. I think what John said, our focus is on structurally improving the health of the business, bringing real consumer innovation, retail excellence, execution, leveraging our footprint of our beauty and our partnerships and really creating the excitement of the category right now. The other big focus is to really advocate about differentiation of beer. Why beer is different from spirit, why beer needs equal taxation, why beer is, you know, it is required in terms of the economic value it adds.
So there’s a lot of work happening on the category. And, and as I said, we feel very positive about the structural improvements and the trends and the hard work of the organization coming together. And we feel buoyant about the perspective of the category in medium to long term. And we’ll continue to invest behind our brands and innovation. Thanks everyone for joining.
operator
Thank you very much on behalf of United Breweries Ltd. That concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.