MUMBAI Nov 12 Shares of United Spirits Ltd
jumped as much as 21 percent on Monday to a two-year
high after several brokerages upgraded the stock, saying the
Indian liquor company sold a stake to Diageo at a
Morgan Stanley raised its rating on United Spirits to
'overweight' from 'equal-weight', saying the $2.1 billion deal
priced the company "significantly higher" than its base case
"USL is now a stock for every portfolio, we believe," Morgan
Stanley analysts wrote in a note on Monday, while also raising
its price target to 1,905 rupees from 1,000 rupees.
Diageo agreed on Friday to buy a 53.4 percent stake in the
liquor maker controlled by Indian businessman Vijay Mallya by
first acquiring 27.4 percent percent from its founders at 1,440
rupees per share, and then launching a mandatory offer for the
United Spirits shares were up 20.6 percent at 1,640.70
rupees as of 0503 GMT, after rising to as much as 1,646.00
rupees, their highest since Oct. 7, 2010.
CLSA raised its rating to 'buy', while setting a new target
price at 1,800 rupees, saying the deal would benefit United
Spirits by reducing debt levels, increasing earnings, imposing
financial discipline and providing operational advantages.
"We see this deal as a game changer for UNSP," CLSA said in
an email to clients.
The brokerage also raised its fiscal 2014-15
earnings-per-share estimates by 35 to 40 percent following the