Carlsberg India Files Updated DRHP: How It Outprofits Kingfisher with Less Revenue

Carlsberg India filed its updated draft red herring prospectus (UDRHP-I) on October 27, 2026, moving its proposed IPO closer to the market. The company had confidentially filed its draft papers in July, and SEBI approved the filing in October. The proposed issue is entirely an offer for sale (OFS) of up to 8.64 crore shares, meaning Carlsberg India itself will receive no money from the sale. Carlsberg India is part of the Denmark-based Carlsberg Group, whose parent company is Carlsberg A/S.

But the updated prospectus offers something more interesting than another IPO milestone: a closer look at the company's financial performance.

United Breweries, the maker of Kingfisher, generates more than twice Carlsberg India's revenue. Yet Carlsberg reported higher net profit in FY26.

How can a smaller business earn more profit than a much larger competitor? And can it sustain that advantage?

How Does Carlsberg Earn More Than Kingfisher With Less Revenue?

The FY26 figures show a striking difference in profitability.

Source: Carlsberg UDRHP

The broad takeaway is clear: Carlsberg reported a higher annual profit despite having substantially lower revenue.

Think of two shops. One sells twice as many products, but keeps only a small amount from each sale. The other sells less but keeps more after paying its costs. The second shop can end up with more money left over.

That is the basic idea behind profit margins. However, the comparison alone does not tell us exactly why Carlsberg earns more. The next question is what allows Carlsberg to keep more from its sales.

The Business Behind the Numbers

How does Carlsberg generate higher profit than Kingfisher with less than half the revenue? The answer lies in two things: what it sells and how efficiently it operates.

1. A more profitable product mix

Carlsberg's portfolio includes Tuborg Strong, Carlsberg Elephant, Tuborg Classic and 1664 Blanc, spanning mainstream to premium beer segments. Tuborg Strong alone contributed 72.6% of gross sales in FY26, while its premium brands offer products at higher price points.

This product mix is reflected in the gross profit margins. Carlsberg reported a gross margin of 50.03%, compared with 44.05% for United Breweries. In simple words, Carlsberg keeps more money from its sales after accounting for the costs covered by gross profit.

2. A leaner manufacturing model

Carlsberg operates seven owned breweries and supplements them with third-party manufacturers. United Breweries, by comparison, operates 21 owned breweries. Using external manufacturers allows Carlsberg to produce beer without having to own every facility, potentially reducing the capital tied up in manufacturing.

This is also reflected in Carlsberg's adjusted return on capital employed (ROCE) of 61.70% in FY26, indicating strong returns relative to the capital invested in its operations.

Think of it like two restaurants. One runs a large kitchen and serves thousands of meals, while the other uses a smaller kitchen and outsources some preparation. If the second restaurant earns more from each meal and needs less capital tied up in its kitchen, it can generate better returns despite serving fewer customers.

The result is a significant difference in operating profitability. Carlsberg converted 20.90% of its net revenue into EBITDA in FY26, compared with 9.21% for United Breweries. That means Carlsberg retained more operating earnings from every rupee of revenue before interest, taxes, depreciation and amortisation, helping it ultimately report a higher net profit despite its smaller revenue base.

The Royalty Clause Investors Should Watch

Carlsberg India pays its Danish parent company a royalty fee to use brands such as Carlsberg and Tuborg. Think of it as paying rent to use a brand.

Under an agreement dating back to 2006, the effective royalty rate was around 1.8%. In June 2026, Carlsberg India renewed its brand licence agreement with higher contractual rates: 4% for Tuborg and 5% for Carlsberg.

However, a separate five-year agreement, called a side letter, keeps the effective rate capped at 1.8%. Carlsberg India paid around ₹90 crore in royalties in FY26.

This lower rate helps keep costs down and profits higher today. But investors need to watch what happens when the five-year arrangement ends. If the parent company does not extend it and the higher contractual rates apply, royalty costs could rise sharply, reducing the profits left for shareholders.

What Should IPO Investors Watch?

Carlsberg India earned more profit than United Breweries in FY26 despite generating much less revenue. Its high return on capital also suggests that it uses its invested money efficiently.

The updated DRHP is useful for understanding the company's financial performance, business risks and agreements with its parent company. Investors can use this guide to reading a DRHP to understand which sections deserve closer attention.

But three questions remain important:

• Can Carlsberg keep earning higher profits? Its margins are strong, but investors need to understand whether this advantage can continue.
• Will royalty costs rise? If the lower royalty rate is not extended after five years, higher payments to the parent company could reduce profits.
• Is the IPO price reasonable? Even a profitable business can be a poor investment if investors pay too much for it.

The updated DRHP gives investors a better understanding of Carlsberg's business. But the final IPO price will determine whether its earnings and growth prospects justify the cost.

Carlsberg's profitability is worth examining, but the real investment question is whether that advantage can endure - and whether the IPO valuation leaves enough room for the risks.