Due to the soaring stock prices over the past year, investors in shares of liquor businesses have done well. Shares of businesses like Som Distilleries and Breweries Ltd, United Spirits, Globus Spirits, Radico Khaitan, Sula Vineyards, and Tilaknagar Industries have increased in value by 5% to 258% in the past year.
Individually, shares of Som Distilleries and Breweries Ltd. have increased by over 258% in a year, followed by those of Tilaknagar Industries, which have increased by over 198%, those of Sula Vineyards, which have increased by 55%, those of United Spirits, which have increased by over 33%, those of Radico Khaitan, which have increased by over 24%, and those of Globus Spirits, which have increased by over 5%.
Zee Business Research claims that the rise in liquor stocks can be attributed to the following factors:
- Strong demand for premium products
- Improved realization to support growth
- Eight to nine states have approved price increases
- Strong demand for wine.
- Both local and foreign institutional investors have increased their interests in numerous alcohol companies, demonstrating their confidence.
Motilal Oswal Fund recently acquired a stake in Global Spirits. FII ownership of United Spirits increased to 15.92% from 15.38% in the June quarter. In the same time frame, FII ownership of Sula Vineyards increased from 5.86% to 6.78%.
Zee Business Research predicts that premiumization will result in improved realization. Additionally, a high demand is anticipated for the next holiday season. The price increases for both country liquor and IMFL (Indian-made foreign liquor) are anticipated to improve margins as well.
The companies will also profit from the backward integration of Extra Neutral Alcohol (ENA), a key component in the production of alcohol.
Liquor corporations will also profit from a drop in glass pricing.
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