United Spirits Q4 FY26 profit up 28% as margins widen

Results snapshot: profit rises, revenue edges up

United Spirits Limited (USL), also referred to as Diageo India, reported a stronger March-quarter performance with profit growth outpacing revenue. The company posted consolidated net profit of ₹539 crore for the fourth quarter ended March, up 28% from ₹421 crore a year earlier. Revenue increased 3.7% year-on-year to ₹3,054 crore. Management attributed the quarterly performance to momentum in its premium portfolio, even as parts of the portfolio felt the full impact of policy changes in Maharashtra. The update is relevant for investors tracking premiumisation in Indian spirits, and the sensitivity of near-term numbers to state-level excise decisions.

Premium portfolio remains the key driver

USL said growth was led by a 5% year-on-year increase in its Prestige & Above segment. On a standalone basis, Prestige & Above accounted for 90.1% of net underlying sales in Q4 FY26, highlighting how concentrated the mix has become toward higher-priced products. The company also flagged that its Popular segment faced pressure during the quarter. Popular accounted for 8.9% of underlying net sales, and net sales from the segment declined 13.2% year-on-year. The segment split points to an ongoing divergence: premium products continue to expand, while the value end is more exposed to state policies and local competitive dynamics.

Maharashtra policy changes weighed on lower-priced segments

The company said the quarter reflected the full adverse impact of Maharashtra Made Liquor (MML) on the state’s popular and lower-prestige segments. This impact was visible in the decline in NSV in the Popular segment, which USL linked primarily to the MML effect in Maharashtra. To help isolate the underlying trend, USL provided an ex-state view of performance. Excluding Maharashtra and Andhra Pradesh, the company’s overall portfolio, including Prestige & Above, recorded 8.5% growth at the national level. That comparison suggests the reported quarterly growth rate was pulled down by a few large state-level effects rather than a broad-based slowdown across markets.

Gross profit and margins: expansion supported by pricing and productivity

USL reported a 9.9% year-on-year rise in gross profit, alongside an improvement in gross margin. On a standalone basis, reported gross margin expanded by 281 basis points to 47.3%. On an underlying basis, gross profit margin widened 212 basis points. The company attributed the margin improvement to pricing gains, sustained revenue growth management measures, cost-of-goods productivity initiatives, and a relatively stable commodity basket. The combination matters because it indicates the company is relying on both pricing and internal efficiency rather than a single lever, while also benefiting from relative stability in key input costs.

Management commentary: resilience in FY26, confidence in FY27 setup

Praveen Someshwar, chief executive officer and managing director, said the company delivered a “resilient fiscal 2026” amid an adverse policy in a key state. He added that the core portfolio at a national level, excluding the impacted state, delivered “broad-based” and “healthy double-digit growth,” and that this positions the company for a strong FY27. The message reinforced two themes from the results: state policy can create sharp short-term swings, but premium-led growth remains supportive when viewed across the country. The commentary also signalled that management is framing FY26 as a year of navigating policy disruption rather than a demand shock.

Karnataka policy and India-UK FTA: positives cited by the company

Someshwar said the company welcomes progressive policy measures introduced by the Karnataka government, noting these could accelerate premiumisation in the state. He also said the proposed India-UK free trade agreement would further support the business. USL linked this to confidence in achieving its medium-term target of double-digit growth. The company did not quantify the expected benefit from these developments in the provided update, but it framed them as supportive external factors alongside portfolio and execution measures.

Board clears RCB stake sale plan; approvals pending

USL said its board approved the sale of the company’s entire stake in Royal Challengers Sports Private Limited on March 24. The company said the transaction remains subject to regulatory clearances, including approvals from the Competition Commission of India and the Board of Control for Cricket in India. USL indicated the divestment is expected to help it sharpen focus on its core alcoholic beverages business. For investors, the point to track is the approval process and the timing of closure, since the company explicitly noted the need for multiple clearances.

Key reported metrics (Q4 FY26)

Market impact and what investors will watch

The results underline that USL’s near-term growth rate can be shaped materially by policy changes in individual states, particularly for lower-priced segments. At the same time, the mix continues to tilt toward Prestige & Above, which the company said drove quarterly growth and formed over 90% of standalone underlying net sales. Margin expansion in the quarter was backed by both pricing and cost initiatives, with the company also citing a relatively stable commodity basket. From here, investors are likely to track how quickly the portfolio normalises in Maharashtra following the MML impact, and whether supportive developments mentioned by management, including Karnataka policy measures and the proposed India-UK free trade agreement, translate into measurable volume or value improvements.

Conclusion

United Spirits reported Q4 FY26 profit growth of 28% with a modest revenue increase, supported by premium-led momentum and gross margin expansion despite Maharashtra policy headwinds. The company also moved to divest its entire stake in Royal Challengers Sports Private Limited, subject to CCI and BCCI approvals. In the near term, the key markers will be the trajectory of the Popular segment after the Maharashtra disruption, and progress on the regulatory clearances required to complete the sports stake sale.