Globus Spirit

Globus Spirits caters to four segments of the alcohol industry – Indian Made Indian Liquor (IMIL), Indian Made Foreign Liquor (IMFL), IMFL Bottling and Bulk Alcohol. And its brands includes Country Club, Nimboo, White Lace, Hannibal Legend amongst many more.

The company’s performance in Q2FY17 was affected on two counts – higher raw material costs and shut down of the plant for maintenance. Revenue from operations (Net) stood flat in Q2 FY17 at Rs.162 crore due high raw material prices which in turn impacted the bulk alcohol volumes. The bulk alcohol volumes declined by 31% (YoY). On the other hand, franchise IMFL volumes improved by 22% and other segment led by value added product DDGS reported 9% volume growth. Net profit came in at a dismal Rs.3 lakh, down by a whopping 98%.  

The company announced on the 28th of Dec that it had resumed its operation and commenced its commercial production (with a production capacity of 80,000 Bulk Litre per day) at its Bihar unit from 2nd Dec. This was “after removing all the technical bottlenecks at its unit.” The plant had to be shut due to flooding at the factory premises caused by heavy rains since September 05, 2016. This shut down will have limited impact on the earnings but Q4 looks more promising than Q3. Alcohol ban in Bihar is expected to have limited impact on the performance as the alcohol manufactured in Bihar distillery will be exported to the neighboring alcohol deficit states and countries. West Bengal continues to be an alcohol deficit state with demand surpassing overall supplies.

The company is equity heavy at Rs.28.80. Annualised EPS stands at Rs.4.5 (FV of Rs.10) and reserve at Rs.335 crore. Promoters stake is at 56.85%. Templeton Strategic Emergic Markets Fund has a 17.49% holding.