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Here is the Share Market Analysis of The Alcoholic Beverages Companies.
In this blog you can find the list of Alcoholic Beverages Companies with ROCE, EPS and ROE related stats :
Prominent Players
- United Spirits
- Market Leader: Highest Market Cap (₹1,19,372.73 Cr.)
- ROCE: 27.87% and ROE: 20.98%, indicating efficient capital use.
- PE Ratio: High at 83.03, which may reflect strong investor confidence.
- United Breweries
- Second Largest: Market Cap ₹54,885.19 Cr.
- High PE Ratio: 116.22, suggesting premium valuation.
- Strong quarterly sales growth of 11.99%.
- Radico Khaitan
- Strong Growth: Quarterly profit variation of 32.82% and sales growth of 20.68%.
- ROE: 11.29%, indicating moderate return on equity.
Emerging Companies
- Piccadily Agro
- Impressive ROCE: 29.59% and ROE: 30.61%.
- Strong quarterly sales growth of 62.05%, a standout performer.
- Tilaknagar Industries
- Moderate Market Cap: ₹8,093.33 Cr.
- PE Ratio: Relatively lower at 44.56.
- Strong ROCE: 22%.
- Sula Vineyards
- Dividend Yield: 2.10%, one of the highest.
- ROCE: 18.81%, showing efficient capital use despite negative profit variation (-37.29%).
Key Observations
- High PE Ratios: Many players (e.g., United Breweries, Radico Khaitan) have high PE ratios, suggesting premium valuations or optimism about growth prospects.
- Strong Performers: Companies like United Spirits, Piccadily Agro, and Tilaknagar Industries stand out for their high ROCE, ROE, and positive growth metrics.
- Dividend Yield: Limited options for dividend-seeking investors; Sula Vineyards offers the highest yield at 2.10%.
Here are stats about Alcoholic Beverages Companies :
| S.No. | Name | CMP (₹) | P/E | Market Cap (₹ Cr.) | Div Yld % | NP Qtr (₹ Cr.) | Qtr Profit Var % | Sales Qtr (₹ Cr.) | Qtr Sales Var % | ROCE % | ROA 12M % | Debt/Equity | EPS 12M (₹) | ROE % |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 | United Spirits | 1641.15 | 83.03 | 119372.73 | 0.55 | 341.00 | 8.10 | 2844.00 | -0.87 | 27.87 | 13.18 | 0.07 | 19.48 | 20.98 |
| 2 | United Breweries | 2075.75 | 116.22 | 54885.19 | 0.48 | 132.33 | 23.33 | 2116.72 | 11.99 | 13.49 | 6.16 | 0.03 | 17.86 | 10.06 |
| 3 | Radico Khaitan | 2514.95 | 116.36 | 33644.35 | 0.12 | 82.19 | 32.82 | 1116.30 | 20.68 | 13.16 | 6.63 | 0.36 | 21.62 | 11.29 |
| 4 | Allied Blenders | 424.35 | 193.09 | 11861.37 | 0.00 | 48.45 | 314.10 | 867.67 | 1.94 | 15.76 | 0.32 | 0.50 | 2.04 | 1.93 |
| 5 | Piccadily Agro | 894.75 | 82.58 | 8441.00 | 0.00 | 24.64 | 121.78 | 184.92 | 62.05 | 29.59 | 13.13 | 0.35 | 13.29 | 30.61 |
| 6 | Tilaknagar Inds. | 419.30 | 44.56 | 8093.33 | 0.12 | 58.23 | 82.42 | 374.86 | 5.78 | 22.00 | 13.67 | 0.13 | 9.00 | 24.58 |
| 7 | India Glycols | 1252.30 | 19.98 | 3875.39 | 0.64 | 49.71 | 30.78 | 961.20 | 24.09 | 10.98 | 3.42 | 0.77 | 62.64 | 9.07 |
| 8 | Sula Vineyards | 405.70 | 39.97 | 3423.15 | 2.10 | 14.48 | -37.29 | 132.36 | -0.99 | 18.81 | 9.73 | 0.65 | 10.15 | 17.16 |
| 9 | Globus Spirits | 845.95 | 38.95 | 2449.34 | 0.41 | 1.56 | -88.06 | 637.86 | 12.47 | 9.56 | 5.76 | 0.42 | 21.82 | 10.41 |
| 10 | Som Distilleries | 110.22 | 22.13 | 2152.13 | 0.00 | 18.70 | 25.93 | 289.73 | 16.96 | 19.43 | 8.31 | 0.21 | 5.02 | 18.45 |
| 11 | Assoc. Alcohols | 1095.00 | 36.26 | 2098.14 | 0.18 | 15.32 | 13.90 | 254.63 | 49.51 | 14.47 | 8.75 | 0.20 | 32.00 | 12.88 |
| 12 | G M Breweries | 796.35 | 11.69 | 1821.13 | 0.70 | 21.67 | -3.13 | 149.00 | -1.70 | 23.53 | 17.51 | 0.00 | 68.31 | 19.64 |
| 13 | Fratelli Vineyard | 329.05 | 160.55 | 1424.06 | 0.00 | -2.91 | -155.85 | 62.09 | -55.64 | 0.76 | -0.18 | |||
| 14 | Jagatjit Inds. | 234.90 | 1098.92 | 0.00 | -7.98 | -421.54 | 137.18 | -2.19 | 10.32 | 1.16 | 5.72 | -2.08 | 9.20 | |
| 15 | IFB Agro Inds. | 546.80 | 200.65 | 511.64 | 0.00 | 2.09 | 199.52 | 266.79 | 11.52 | -2.40 | -1.31 | 0.03 | 2.72 | -1.51 |
| 16 | Shri Gang Indus. | 142.25 | 11.43 | 255.05 | 0.00 | 18.02 | 355.05 | 97.42 | 39.33 | 27.21 | 7.00 | 13.34 | ||
| 17 | Aurangabad Dist. | 213.00 | 12.29 | 218.32 | 0.00 | 6.13 | 52.23 | -17.63 | 24.92 | 12.14 | 0.75 | 17.24 | 27.20 | |
| 18 | Piccadily Sugar | 64.23 | 149.33 | 0.00 | -1.20 | -12.15 | 2.63 | 112.10 | -20.95 | -7.40 | 1.85 | -1.01 | -34.32 | |
| 19 | Silver Oak (India) | 355.40 | 134.70 | 0.00 | -0.29 | 39.58 | 0.00 | -0.23 | -3.01 | 1.28 | -2.43 | -10.97 | ||
| 20 | Ravikumar Distiller. | 26.89 | 314.28 | 62.86 | 0.00 | 0.04 | -92.98 | 10.84 | 104.91 | 0.32 | 0.18 | 0.98 | 0.08 | 0.54 |
Are Alcoholic Beverages Companies Good To Invest in !!?
1. Industry Overview
- Steady Demand: Alcoholic beverages often show consistent demand, even during economic downturns. They are considered a defensive sector.
- Growing Market: Emerging markets like India are seeing increased alcohol consumption due to rising disposable income, urbanization, and changing social norms.
- Premiumization Trend: Consumers are shifting towards premium and craft beverages, creating opportunities for companies focusing on high-margin products.
2. Pros of Investing in Alcoholic Beverages
- Stable Growth: Companies like United Spirits and United Breweries have strong brands and consistent revenue streams.
- High ROCE/ROE: Some companies (e.g., GM Breweries, Piccadily Agro) show high returns on capital employed, indicating efficient use of resources.
- Dividends: Established players like GM Breweries offer decent dividend yields, providing passive income.
- Export Opportunities: Companies like Sula Vineyards are tapping into international markets, offering diversification and growth potential.
3. Cons and Risks
- Regulatory Risks: The alcohol industry is heavily regulated, and changes in government policies (e.g., prohibition in certain states) can impact sales.
- High Competition: Smaller players often struggle against established giants like United Spirits and Radico Khaitan.
- Volatility: Companies with high P/E ratios (e.g., Allied Blenders, Radico Khaitan) may be overvalued, leading to short-term volatility.
- Debt Levels: Some companies have high debt-to-equity ratios, which can be a risk in rising interest rate environments.
Key Companies to Watch
- Strong Players:
- United Spirits (Diageo): Market leader with a diverse portfolio and global presence.
- United Breweries: Dominates the beer segment in India with strong brand recognition.
- Radico Khaitan: Growing in the premium spirits segment with strong financials.
- Emerging Players:
- Sula Vineyards: India’s leading wine company with export potential.
- Tilaknagar Industries: Turning profitable with niche offerings like brandy.
Key Metrics for Evaluation
When investing in this sector, consider these metrics:
- P/E Ratio: Compare the valuation with peers. Be cautious of very high P/E ratios.
- ROCE & ROE: Higher values indicate better efficiency and shareholder returns.
- Debt-to-Equity Ratio: Look for companies with manageable debt levels.
- Profit and Sales Growth: Check quarter-over-quarter and year-over-year growth rates.
- Market Trends: Companies tapping into premium products or export markets have better long-term prospects.
Current Standouts
- GM Breweries: Low P/E ratio (11.69), high ROCE (23.53%), and strong dividend yield (0.70%).
- Radico Khaitan: Strong growth in premium offerings and consistent profit increase.
- United Spirits: Market leader, though slightly overvalued (P/E 83.03).
Conclusion
Alcoholic beverages can be a good long-term investment, particularly with established players and companies focused on premiumization and export growth. However, due diligence is essential:
- Diversify Your Portfolio: Don’t overinvest in one sector.
- Monitor Regulations: Stay updated on government policies affecting the sector.
- Focus on Leaders: Established brands with strong market positions are safer bets.
The alcoholic beverages market is indeed a large and profitable sector. Once a brand is well-established, it often achieves stability and consistent returns due to several key factors:
1. Brand Loyalty
- Alcoholic beverage consumers tend to stick with brands they trust and enjoy, creating a loyal customer base.
- Well-established brands like United Spirits’ McDowell’s No. 1 or United Breweries’ Kingfisher capitalize on this loyalty, ensuring steady revenue streams.
2. High Margins in Premium Segments
- As brands grow, they often shift focus toward premium and luxury products, which offer higher profit margins.
- For example, Radico Khaitan’s Magic Moments Vodka and Sula Vineyards’ premium wines target high-margin markets.
3. Economies of Scale
- Established companies benefit from economies of scale in production, distribution, and marketing, reducing per-unit costs.
- Players like United Spirits and United Breweries dominate the supply chain, making them more cost-efficient and resilient.
4. Resilience in Recessions
- Alcohol is a “defensive” product, meaning demand tends to remain stable even during economic downturns. People may switch to cheaper alternatives, but consumption rarely declines significantly.
5. Global Market Opportunities
- Brands with strong domestic presence can expand globally. For instance, Sula Vineyards exports Indian wines internationally, while Radico Khaitan has growing exports of its spirits.
6. Government Revenue Dependency
- Governments earn substantial revenue from alcohol excise duties, which makes complete prohibition unlikely in most regions. This dependence indirectly supports the stability of the industry.
Challenges for Emerging Players
For newer or smaller companies, the market can be challenging due to:
- Regulatory Hurdles: Alcohol businesses face strict licensing and distribution regulations, making entry and expansion harder.
- Branding Costs: Establishing a recognizable brand requires heavy investment in advertising and marketing.
- Competitive Pressure: Dominant players with vast distribution networks and established products often overshadow newcomers.
Case Study: Stability of Established Brands
- United Spirits (Diageo): A diversified portfolio of products across price points ensures consistent sales. The company invests heavily in branding and has a global reach, offering unmatched stability.
- United Breweries: Its dominance in the beer market and association with Heineken provide financial strength and brand value.
- Radico Khaitan: Its focus on premiumization has driven profitability and stability in the competitive spirits market.
Final Thoughts :
Investing in well-established alcoholic beverage companies can provide stability and consistent returns due to strong brand loyalty, high margins, and market resilience. While newer entrants may offer higher growth potential, they come with greater risks. For long-term investors, focusing on market leaders or those transitioning into premium segments is often a sound strategy.