United Spirits' Q2: Premium Sales Up 6.3% on Fewer Cases, With Two States' Rulebooks Underneath

United Spirits sold 5.0% fewer cases in the September quarter and still grew net sales value 2.8%, to ₹3,258 crore. Its own bridge puts volume at minus ₹156 crore and price/mix at plus ₹283 crore. The company puts part of the cause in "policy": Maharashtra for the whole book, and Karnataka's excise slab changes for its cheapest segment. EBITDA margin fell 146 bps to 19.7% even though gross margin rose 88 bps, because marketing spend went up by 400 bps of sales. This piece sets out what the filings say on state policy, what they leave out, and what it means for the moat.

MoatSCORE: 5.50 (read live on the Moat Screener on 29 Oct 2026; first-pass, provisional) on our Moat Screener. Our first-pass note on the company is on its moat page.

All figures are standalone, for the quarter ended 30 September 2026 against the year-ago quarter, unless stated otherwise.

The idea in one sentence

A company can show rising price/mix and a growing share of premium sales while selling fewer cases, and the reader has to find out whether the brand raised the price or a state rule took away the cheap cases and changed the duty, because only the first is pricing power.

The fact that breaks the assumption

The Prestige & Above (P&A) segment, the company's premium tier, grew net sales value 6.3% to ₹3,065 crore while its volume fell 1.2%, to 14,190 thousand cases from 14,359 thousand ([B], p. 7). The total went the other way on volume: 15,769 thousand cases against 16,605 thousand, down 5.0% ([B], p. 6). P&A was 94.1% of net sales value, up 3.1 percentage points ([B], p. 7).

A reader who stops there sees premiumisation. The same release says what offset it. The CEO, Praveen Someshwar: "We delivered a resilient quarter despite a strong prior-year base and regulatory headwinds" ([B], p. 3). The release's net sales paragraph, after crediting P&A's growth, ends: "This was partially offset by the continuing impact of the adverse policy in Maharashtra" ([B], p. 4). Profit after tax was ₹462 crore, down 2.1% from ₹472 crore ([B], p. 6); before exceptional items, profit before tax was ₹609 crore against ₹662 crore, down 8.0% (our arithmetic), because this quarter had ₹11 crore of exceptional income against a ₹30 crore charge a year ago ([B], p. 6).

One caution: from Q2 FY27 the company moved McDowell's No.1 brandy from Popular into P&A "based on the consumer price point" and restated both periods ([B], p. 3). Excluding brandy, P&A volume is down 1.6% and value up 6.5% ([B], p. 7).

One concrete thing, followed: the Popular line

The Popular segment, the cheapest tier, is where the policy language lands ([B], p. 7):

The company's explanation is in two places. For the quarter: "This was driven by MML impact in Maharashtra as well as recent policy changes in Karnataka, which have adversely impacted the realisations and growth in the segment owing to excise slab changes" ([B], p. 4). For the half-year: "policy related headwinds both in the state of Maharashtra, owing to MML, and Karnataka, due to excise slab changes" ([B], p. 5). The Q2 filings do not expand MML; the company's 2025-26 annual report does: in August 2025 Maharashtra announced "a new low-tax category for grain-based spirits manufactured within the state under the Maharashtra Made Liquor (MML) framework", with eligibility "linked to local manufacturing and ownership criteria" ([J], p. 124). No filing read gives excise rates.

Now divide. Net sales value per case in Popular was about ₹1,146 against about ₹1,042, up about 10.0% (our arithmetic). Fewer cases, each worth more. The release says the policies "adversely impacted the realisations", yet value per case rose. The filings do not define "realisations", so we cannot reconcile the two; one possibility, from the Q1 FY27 call, is that Karnataka's change raised Popular prices: the CFO, Pradeep Jain, said "Popular has gone up" and "Popular will get squeezed and Prestige & Above will benefit" ([E], p. 18). That is the company's account of Q1; it is not in the Q2 filings.

Net sales value rose ₹88 crore: P&A added ₹181 crore, Popular lost ₹53 crore and the unexplained "Other" line lost ₹40 crore, from ₹52 crore to ₹12 crore (our arithmetic from [B], p. 7). Popular and Other took back about half of P&A's gain.

The mechanism: one rulebook, three effects

1. It removes cheap cases, which lifts the average without any price rise. The company's own bridge shows the shape ([B], p. 8, read from the page image): last year ₹3,170 crore; volume −₹156 crore; price/mix +₹283 crore; others −₹39 crore; this year ₹3,258 crore. As a share of last year's net sales value that is volume −4.9% and price/mix +8.9% (our arithmetic). In the Q1 FY27 call the CFO said Maharashtra's volume loss "mathematically is accretive on the national price mix"; reported Q1 price/mix was 9.4% overall and 11.4% for P&A, and "when we exclude Maharashtra from the equation, overall price/mix normalizes to 5.4% and P&A comes down to 8.4%, which is what should be considered for the way forward" ([E], p. 6). The Q2 filings give no such normalisation. If Q2 behaves like Q1, a large part of the 8.9% is lost volume, not price (our reading).

2. It rewrites the duty and the shelf price on the premium tier. Karnataka is the other state. The CFO put it at "roughly about 6% to 7% of our national P&A" in value ([E], p. 18), and said the policy was "very favorable to our Prestige & Above portfolio" ([E], p. 6). The Q2 release credits P&A growth to Smirnoff local-flavour innovation, the J&B Scotch relaunch and the luxury portfolio, not Karnataka ([B], p. 4). On the numbers the filings do give, excise duty fell 6.9% (₹3,743 crore against ₹4,022 crore) on 5.0% fewer cases. Per case, gross revenue including excise rose only about 2.5% while net sales value per case rose about 8.2%, because excise per case fell about 2.0%, and excise was 53.5% of gross revenue against 55.9% (all our arithmetic from [B], p. 6). Our reading: much of the gain in net sales value per case came from a smaller duty take per case, not from a higher price on the bill. The filings give no excise by state, so they cannot show whether this is Karnataka, Maharashtra or mix.

3. Management reinvests the gain. Gross profit grew 4.7% to ₹1,563 crore and gross margin was 48.0%, up 88 bps, which the company attributes to "better mix, and productivity flow-through partially offset by the continued adverse impact from the West Asia crisis" ([B], p. 4). Then marketing: ₹378 crore against ₹241 crore, or 11.6% of net sales value against 7.6% ([B], p. 6). The company's EBITDA bridge is plain: gross margin +88 bps, A&P −400 bps, staff cost +82 bps, other overheads +84 bps, for a net −146 bps ([B], p. 8).

Per case (our arithmetic from [B], p. 6):

Gross profit per case rose faster than net sales value per case, and almost all of the extra went into marketing, so EBITDA per case was flat while the margin fell (our reading). The company says EBITDA was "impacted by the conscious pro-active A&P spending ahead of season" ([B], p. 4).

What this says about the moat. The test of a brand edge is whether the premium tier holds its volume when the rules and prices move. In P&A, volume was down 1.2% while Popular's was down 29.7%. The tier where brands are dearest lost the fewest cases, which is what an intangible-asset edge would predict (our reading). It does not show pricing power: that would be value per case growing against the rules, not because of them, and the filings do not separate the two.

Where this breaks

The company's own algorithm is not being met. In the Q1 call the CEO restated the company's "historically stated double-digit growth construct with 5% to 6% P&A volume growth and 6% to 7% price mix" ([E], p. 3). In Q2, P&A volume fell 1.2% and P&A value per case rose about 7.5% (our arithmetic). The price/mix half is above the range; the volume half is about six or seven points below it. The Q2 release gives no Maharashtra-adjusted figure, so we cannot say the underlying volume is on track. In the Q1 call the CEO said P&A volume ex-Maharashtra grew 6.4% against a reported fall of 1.3% ([E], p. 3).

The "ahead of season" reason may not explain the marketing. A&P was 11.6% of net sales value in Q2 and 11.5% in Q1; last year it was 7.6% and 9.3% ([B], p. 6; [D]). The step-up looks less like one quarter of festive spend and more like a new level against a lean base (our reading). At last year's 7.6%, A&P would have been about ₹130 crore lower (our arithmetic; an illustration, not a forecast). If the new level is what it takes to hold P&A volume against policy, the margin cost lasts; if it is a launch burst for J&B Scotch and Smirnoff Ice ([B], pp. 3-4), it does not.

A state rulebook is the opposite of a moat. It can be rewritten. The CEO said of MML: "it's sub-judice" ([E], p. 15). What helps in Karnataka can reverse; what hurts in Maharashtra can fade. A reader who credits the brand for a gain the rulebook gave, or blames it for a loss the rulebook took, has the wrong model. The CFO's Q1 call guidance that "Second half will definitely be higher than the first half" because "Maharashtra will fall off" ([E], p. 19) is a forecast, not a result.

Peers took the same policy and got a different result. Radico Khaitan, in its filings dated 27 October, cites the same two states, along with a high base after a route-to-market change in Andhra Pradesh, for its fall in Regular volume: "the impact of the policy change in Maharashtra and Karnataka" ([F], p. 13), and calls Karnataka's "rationalised duty framework" one that is "showing early signs of a healthier, more premium-friendly market" ([F], p. 8). Its P&A volume rose 35.8%, Regular & Others fell 9.7%, and EBITDA margin was 20.4% against 15.8% ([F], pp. 4, 10-11; see our Radico piece). The tiers are defined differently, and United Spirits' P&A was already about 91% of net sales value a year ago, so there was less mix left to gain (our arithmetic and reading). Still, policy alone does not explain United Spirits' flat premium volume (our reading).

Standalone is not the group. Consolidated profit was ₹428 crore against ₹464 crore (down about 7.8%, our arithmetic), because of a ₹32 crore loss from discontinued operations (the sports franchise held for sale) against ₹3 crore a year ago; continuing operations earned ₹460 crore against ₹467 crore ([A], consolidated statement). The 2.1% PAT fall in the release is standalone.

Auditors. The limited review conclusion in [A] is unmodified. The standalone report draws attention to the IDBI Bank dispute (Note 6(c)) and to the historical inquiry matters (Note 6(a)) and says for each: "Our conclusion is not modified in respect of this matter." Neither concerns this quarter's operations.

Limits. One quarter, unaudited, standalone; we have not seen the Q2 call. On 17 October the company also disclosed a Directorate of Revenue Intelligence search that it "understands" is part of an "industry-wide exercise", and reports no impact on its financial or operational activities "as of now" ([I]).

Why it costs the reader something

A reader who takes a 94.1% premium share as proof of pricing power will miss that cases fell 5.0% and that EBITDA per case was flat. A reader who treats "policy" as an excuse will miss that the same rules shaped both the lift and the loss. Our first-pass note [H] names Intangible Assets as the edge; this quarter is consistent with it on one test, premium volume holding better than the cheap tier's, and silent on the other, price discretion.

What to watch

1. The 29 October call: a Q2 P&A volume and price/mix figure excluding Maharashtra, and a figure for Karnataka's effect.
2. Whether A&P stays near 11.5% of net sales value in the December quarter.
3. The CFO's Q1 statement that the second half will be better than the first: P&A volume turning positive would test it.
4. The Maharashtra court case the CEO called "sub-judice" ([E], p. 15), and any further state excise change.

The concrete thing, again

One line, Popular: 1,579 thousand cases, 29.7% fewer, each worth about 10% more. Next to it, premium sales up 6.3% on 1.2% fewer cases. In a quarter the company calls resilient, the arithmetic of mix did part of the work growth would normally do, and two state rulebooks did part of the arithmetic. The filings name the states and not the sizes. Until they do, the moat reading is that the brands held volume better than the cheap tier did, and nothing more.

Sources

• [A] United Spirits, Q2 FY27 results, notes and limited review reports (NSE, 28 Oct 2026)
• [B] United Spirits, press release, Q2 and H1 FY27 (NSE, 28 Oct 2026)
• [C] United Spirits, Regulation 30 disclosure, changes in senior management (NSE, 28 Oct 2026)
• [D] United Spirits, press release, Q1 FY27 (NSE, 22 Jul 2026)
• [E] United Spirits, Q1 FY27 earnings call transcript, 23 Jul 2026 (company website, linked from its NSE letter of 30 Jul 2026)
• [F] Radico Khaitan, Q2 FY2027 earnings presentation (NSE, 27 Oct 2026)
• [I] United Spirits, Regulation 30 disclosure, DRI search (NSE, 17 Oct 2026)
• [J] United Spirits, Annual Report 2025-26 (NSE, 10 Jul 2026)
• [G] Radico Khaitan's 20% Margin and the Product Mix and [H] United Spirits Moat Analysis, with the Moat Screener and How MoatSCORE works

Educational research, not investment advice. Every figure above is drawn from United Spirits' own filings (and, for the comparison, Radico Khaitan's), read from the primary documents on 29 October 2026; derived figures are our arithmetic, labelled as such. MoatSCORE: 5.50 (read live on the Moat Screener on 29 Oct 2026; first-pass, provisional). No buy/sell recommendations, no price targets, no share prices. Moat & Margin is not a SEBI-registered Research Analyst or Investment Adviser.