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Investment Rationale
Globus Spirits Ltd (GSL) is Delhi based diversified beverage alcohol
company with its presence in nine states and an only company in the
domestic markets with a unique 360 degree business model.
Capacity expansion to drive volume growth
GSL has completed the capacity expansion programme at its two state of
the art distilleries at Samalkha, Haryana & Behror, and Rajasthan from
28.6 mn BL to 70 mn BL. Further the merger of demerged undertaking of
ADL with the company adds another 14.4 mn BL of capacities. Thus the
total installed capacity of GSL currently stands at 84.4 mn BL. Bulk
alcohol & franchisee bottling are the direct beneficiaries post the capacity
expansion and increased volumes in the these two segments is expected
to drive growth for GSL.
Market leader in the IMIL space in North Indian markets of Haryana,
Delhi & Rajasthan
GSL has been able to sustain its leadership position in North India in the
IMIL space through its flagship brand “Nimboo” This has resulted in the
company’s market share increasing to 27% from 20% in Haryana. GSL has
a leadership position in the states of Delhi and Rajasthan with a decent
market share at 25% & 24% respectively.
New product launches and entry in new states on the cards
During FY13 GSL is all set to launch new products and make its
presence in newer states. It is planning to launch new products in the
IMFL semi premium brand segments for Whisky & Brandy. Also the
company is looking to make its entry in the 2-3 newer states in the
Eastern region. GSL has also bagged the license in the state of
Jharkhand.
Valuation
GSL is currently trading at 6.1x & 3.8x its FY12E & FY13E earnings of Rs
18.1 & 28.9 respectively. On P/B it is trading at 1.0x & 0.8x its FY12E &
FY13E book value which is very attractive. We recommend “Buy” on the
stock as it has got tremendous potential to scale up further heights from
the current levels.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Investment Rationale
Globus Spirits Ltd (GSL) is Delhi based diversified beverage alcohol
company with its presence in nine states and an only company in the
domestic markets with a unique 360 degree business model.
Capacity expansion to drive volume growth
GSL has completed the capacity expansion programme at its two state of
the art distilleries at Samalkha, Haryana & Behror, and Rajasthan from
28.6 mn BL to 70 mn BL. Further the merger of demerged undertaking of
ADL with the company adds another 14.4 mn BL of capacities. Thus the
total installed capacity of GSL currently stands at 84.4 mn BL. Bulk
alcohol & franchisee bottling are the direct beneficiaries post the capacity
expansion and increased volumes in the these two segments is expected
to drive growth for GSL.
Market leader in the IMIL space in North Indian markets of Haryana,
Delhi & Rajasthan
GSL has been able to sustain its leadership position in North India in the
IMIL space through its flagship brand “Nimboo” This has resulted in the
company’s market share increasing to 27% from 20% in Haryana. GSL has
a leadership position in the states of Delhi and Rajasthan with a decent
market share at 25% & 24% respectively.
New product launches and entry in new states on the cards
During FY13 GSL is all set to launch new products and make its
presence in newer states. It is planning to launch new products in the
IMFL semi premium brand segments for Whisky & Brandy. Also the
company is looking to make its entry in the 2-3 newer states in the
Eastern region. GSL has also bagged the license in the state of
Jharkhand.
Valuation
GSL is currently trading at 6.1x & 3.8x its FY12E & FY13E earnings of Rs
18.1 & 28.9 respectively. On P/B it is trading at 1.0x & 0.8x its FY12E &
FY13E book value which is very attractive. We recommend “Buy” on the
stock as it has got tremendous potential to scale up further heights from
the current levels.
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