Share of Globus Spirits Limited (GSL) has delivered 346 per cent returns to its shareholders in the last 12 months. The share stood at Rs 130.7 on June 18, 2020. It has zoomed to Rs 584.40 today, translating into gains of 346 per cent during the period. In comparison, Sensex rose 53 per cent in one year.
Rs 5 lakh invested in the IMFL (Indian-made foreign liquor) player a year ago would have turned into Rs 22.35 lakh today.
The stock has gained 81 per cent since the beginning of this year. It opened 5.2 per cent higher at Rs 559 against the previous close of Rs 531.30 on BSE.
The share of GSL stands higher than 5 day, 10 day, 20 day, 50 day, 100 day, and 200-day moving averages.
"On the IMIL front, GSL expects more premium price points in the value segment led by higher strengths (>40%) in IMIL space (e.g. Rajasthan medium liquor) while on the ENA front, the management continues to expand its facilities in deficit states (to gain higher realisation and utilisation levels). Hence, with higher revenues and elevated margins, FCF yield is expected to remain high," ICICI Direct said.
The brokerage house has a 'Buy' rating on the stock with a target price of Rs 690 per share. It noted that GSL has been a beneficiary of the changing dynamics in the liquor space. The management has been at the forefront in capturing the opportunities.
It further added that the long term ethanol procurement by the Government of India is expected to keep ENA realisation stronger while newer product launches along with downtrading of liquor brands and enforcement of the law on illicit liquor trading are expected to help the IMIL
segment.
The management expects to maintain margins, use cashflows to lower debt, and fund CAPEX programmes in the near to medium term.
Globus Spirits has a product range across the two ends of the liquor segment (hourglass shaped consumption), including manufacturing extra neutral alcohol (ENA) to contract bottling of Indian made foreign liquor (IMFL), to marketing, selling IMIL, several by-products.
The company posted a 161.02 per cent jump in net profit to Rs 50.64 crore for the quarter ended March 2021 compared to Rs 19.40 crore in Q4FY20. Net Sales stood at Rs 356.68 crore in March 2021, up 31.37 per cent from Rs 271.51 crore in March 2020.
The share of consumer business grew 43 per cent in FY21 from 35 per cent in FY20, on the back of both volume and value growth.
EBITDA (earnings before interest, taxes, depreciation, and amortisation) margin grew by over 1,140 bps YoY to 24.9 per cent in Q4FY21 from 13.5 per cent in Q4FY20. The expansion was driven by a higher share of consumer business, better realizations in ENA and Ethanol, and softened Input prices.
Meanwhile, the liquor stocks have been on a roll for the past few days on the back of strong earnings. Globus Spirits share has gained 50 per cent in the last one week. The company is the largest grain-based ENA manufacturer in India with a capacity of 160 million litres.