Globus spirits - Business Analysis
A great play on ethanol theme?
Sometimes I drink water to surprise liver, But can Globus spirits surprise with its performance?
A thread🧵
1)
#globussprits #unitedspirits #diageo #radicokhaitan #investing #stocks #nse
2) Story/ theme
- Contract Manufacturing
- Ethanol blending
- Premiumization of spirits
3) About Company
It is engaged in manufacturing of IMIL, IMFL, bulk alcohol, hand sanitizer & franchise alcohol blotting
It's a unique 360° business model with forward & backward Integration
4) Business segments
i) manufacturing segment - bulk spirits, franchise blotting, by products
ii) consumer segments - value, value plus & premium brands
5)
i) manufacturing segment
Bulk alcohol-Largest ENA player with 195 mn litres capacity with presence in rajasthan,haryana,WB
Franchise blotting 20yrs of strong relationship with Diageo,United spirits & ABD
By products-used for animal feed supplements & CO2 for carbonation
6
ii) consumer segments
It is one of the largest IMIL player
It has brands in mass to premium segments
Value & Value plus brands-Globus green ,county club,royal estate,black lace
Premium brands -Governor reserved , Oakton,Terai( Indian dry gin)
Gin is fastest growing segment
7) Revenue realisation in consumer segment
avg realisation in value & value plus rs 461/ case
Price increase of Rs 19/case in value & Rs 39/case in value plus wef april 1st 2022
So Q1FY23 will be good quater
8 Realisation in Manufacturing
Capacity utilisation at 90% (expect more capex to come)
Avg realisation up 8% you & 11%qoq
Sales have increased due to new capex live at WB
9) FY22 Highlights
Rev 2344crs up 50%
EBITDA 335crs up 28%
EBITDA margin 21.2%
PAT 187crs up 30%
All plants operating at optimum capacity
New capex live at WB
Dividend of 3rs/share
Finance cost at just 3.9% 🔥🔥
10) Q4FY22 highlights
- gross margin at 42%
- Ethanol price increased by 1.37%
- New capex live at WB
- RM pressure,fuel cost up 37% , packaging cost up 40%
- Price up in RJ
- mitigation of broken rice helps increase incremental cost realisation of 3rs/L ethanol
-eff tax 19%
11) capex update
New plant at jharkhand
New ethanol plant at UP & odisha
10yrs of long term ethanol contract
12) Market share
Rajasthan - 32%
Haryana - 10%
West Bengal -2%
13) Globus spirits vs peers
It's trading at mouth watering valuations vs peers
Cheapest and the best spirits & ethanol company with best financials and valuation
14) Key risks
- Govt control over prices
- C. Governance issue from promotors long back
- Bihar plant is prone to floods
- capacity utilisation is at peak so more capex will be announced and financial will not be great
15) brokerage coverage
- Edelweiss 1400
- icici 1750
- incred 3750
I'm on same side of incred with personal target of 4000rs with timeline of 2yrs
For research reports dm
D- invested ,not recommendation
If u found it useful do like share & retweet & consider following me
16) Incred has target of 3780rs/share
That's 260% or 2.6x cmp
#globusspirts #incred @IncredCapital
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