INDIA- Danish global brewer, Carlsberg Group is planning for local listing for its Indian operations in a bid to grow its market share in the beer business dominated by United Breweries.
According to an article by the Bloomberg, Carlsberg may be attracted by the high valuations in the Indian stock market, where United Breweries trades at about 73 times this year’s estimated earnings.
People familiar with the matter, as cited by Bloomberg said the brewer is interviewing potential arrangers for the share sale over the next few weeks.
“This is a well-timed move, and we are expecting Carlsberg to price this issue aggressively,” said Kranthi Bathini, director of Mumbai-based financial advisory firm WealthMills Securities Pvt.
“Rising disposable incomes and changing attitudes toward alcohol among young urban consumers make this a good India consumption story that investors will lap up.”
While India has witnessed a growing demand for a premium, strong quality beer, United Breweries has taken advantage of expanding its portfolio through its super-premium beer range.
It recently launched the popular Dutch beer brand, Amstel in India.
Based on Bloomberg data, Carlsberg’s shares have risen 61% over the past 12 months, outpacing the 15% gain in the benchmark S&P BSE Sensex while Diageo Plc’s local unit, whiskey producer United Spirits Ltd., trades at 63 times forecast profit.
Carlsberg turns profitable in India
Carlsberg said Indian business grew 30% by volume due to lower base and increasing market share of its strong beer brand Tuborg in 2018 first quarter results.
Carlsberg’s Indian unit has been focusing more on strong beer such as Tuborg Strong and Elephant because strong beer accounts for 80% of overall beer volume sales in the country.
The company claims that Tuborg is now the second largest beer brand in the country.
Carlsberg is the third largest player with 13.7% market share in the Indian beer market valued at US$8.6 billion and this move further strengthens its position in the region said to be developing a thirst for foreign beer.
Euromonitor established that India’s beer market is expected to grow to US$10.7bn by 2020, up from $8.6bn last year.
The company is competing against India’s leading brewer and maker of Kingfisher, United Breweries which commands 39.2% market share, followed by Budweiser parent Anheuser-Busch InBev, which has 23.3%.