United Spirits Ltd. (UNSP), India’s second-largest maker of alcoholic beverages by market value, slumped the most in three weeks in Mumbai trading after reporting fourth-quarter profit fell 83 percent.
United Spirits declined 6.3 percent to 611.70 rupees at the close in Mumbai, the biggest drop since May 9. The stock was the biggest loser on the 11-member BSE India Fast Moving Consumer Goods Index.
Foreign-exchange losses and higher finance costs cut net income to 100 million rupees ($1.8 million) in the three months through March, from 599 million rupees a year earlier, the Bangalore, India-based company said today in a statement. Borrowing costs in India increased as the Reserve Bank of India raised key interest rates by 3.75 percent from March 2010 to October last year to curb inflation. (INFINFY)
“High interest cost is a concern,” Alex Mathews, head of technical and derivatives research at Geojit BNP Paribas Financial Services Ltd. (GBNP), said by telephone today. “If the RBI decreases the rates, these stocks will definitely move up, or otherwise, they will remain sluggish for some more time.”
Inflation in India accelerated to 7.23 percent in April, the government said on May 14, faster than the 6.67 percent median of 32 estimates in a Bloomberg News survey.
The loss from foreign exchange widened to 205 million rupees from 2.7 million rupees a year earlier, while interest costs rose 43 percent to 1.66 million rupees, United Spirits said.
Net sales for the maker of McDowell’s No. 1 whiskey and Romanov vodka increased 17 percent to 18.6 billion rupees in the quarter. This compares with the 18.4 billion-rupee median of 13 analysts’ estimates compiled by Bloomberg.
Today’s share-price slide trims United Spirits’ climb this year to 24 percent, compared with a 5.6 percent advance for the benchmark Sensitive Index.
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