Global investment bank UBS has downgraded United Spirits to "sell" from "neutral" with a target price of Rs 1,800. The downgrade comes after a sharp run-up in the stock following the announcement of a USD 2.1-billion deal with UK-based spirits major Diageo last week.
Last week, Diageo said it would acquire 53.4 per cent stake in the company.
Morgan Stanley, JPMorgan and CLSA had raised their ratings after the deal announcement to the equivalent of a “buy”, saying United Spirits will substantially cut its debt and improve its profits post the deal, according to an NDTV report. However, UBS said Diageo’s strategy will take long to play out. Under the deal announced last week, Diageo would first buy a 27.4 per cent stake from United Spirits' founders at Rs 1,440 per share, and then launch a mandatory open offer for the remainder.
Source
Morgan Stanley, JPMorgan and CLSA had raised their ratings after the deal announcement to the equivalent of a “buy”, saying United Spirits will substantially cut its debt and improve its profits post the deal, according to an NDTV report. However, UBS said Diageo’s strategy will take long to play out. Under the deal announced last week, Diageo would first buy a 27.4 per cent stake from United Spirits' founders at Rs 1,440 per share, and then launch a mandatory open offer for the remainder.
Source