Fundamental Analysis Of Som Distilleries & Breweries – Future Plans, Financials, And More
Fundamental Analysis Of Som Distilleries & Breweries: The growth rate remains constant as more men and women reach the drinking age, income rises, and the population expands. Alcobev is changing the dynamics of the industry as heightened awareness, personal choices, urbanization, and building a culture to invite guests to have a drink at gatherings is […] The post Fundamental Analysis Of Som Distilleries & Breweries – Future Plans, Financials, And More appeared first on Trade Brains.
Fundamental Analysis Of Som Distilleries & Breweries: The growth rate remains constant as more men and women reach the drinking age, income rises, and the population expands. Alcobev is changing the dynamics of the industry as heightened awareness, personal choices, urbanization, and building a culture to invite guests to have a drink at gatherings is expected to drive interest.
One of the factors driving interest in alcohol is the growing young population and working-age population, combined with work pressure and self-satisfaction for achievement. In this article, we will learn about the Fundamental Analysis Of Som Distilleries & Breweries, which operates in the Alcobev industry.
Fundamental Analysis Of Som Distilleries & Breweries – Company Overview
Som Distilleries is an Indian-based company that was founded in 1993 by J.K. Arora under SOM Group. They specialize in the brewing, bottling, canning, and blending of alcoholic beverages, including beer and Indian-made foreign liquor (IMFL). The company has established a sales and distribution network within India and also exports products to various regions around the world, including Africa, America, Asia, and the Middle East.
Their product portfolio includes a range of alcoholic beverages such as beer, rum, brandy, vodka, and whiskey. Some of their core brands include Hunter Beer, Woodpecker Beer, and Black Fort, as well as other brands such as Legend, Genius, Sunny, Gypsy, and Blue Chip. The company generates substantial revenue from the sales of beer.
Segment Analysis:
The company’s revenue from operations is derived from the manufacturing and sale of alcoholic beverages, which makes up a single segment. They hold a significant market share in states like Madhya Pradesh and Karnataka. Recently, the company was able to increase its market share and record around 51% year-to-date volume growth in Karnataka.
Fundamental Analysis Of Som Distilleries & Breweries – Industry Analysis
In the Indian alcoholic beverage (alcobev) industry, the remarkable growth in recent years made it one of the fastest-growing beverage markets globally. It has also established itself as the third-largest market for alcoholic beverages worldwide.
This rapid expansion is driven by various causes, including more urbanization, higher disposable incomes, shifting consumer choices, and shifting young expectations. India’s high population growth rate is also contributing to the rise in alcohol consumption, with a growing number of adults of drinking age every year.
Despite facing challenges in the past two years due to the pandemic, such as lockdowns and higher taxes, the industry has adapted by modifying distribution channels to comply with restrictions and introducing new product combinations to cater to changing consumer demands. This adaptability has enabled the industry to recover and experience a sales surge following the pandemic.
According to IMARC Group, the India beer market size reached INR 414.7 billion in 2023 and is expected to reach INR 781.2 billion by 2032, with a compound annual growth rate (CAGR) of 7.1% from 2024 to 2032.
Some of the major drivers driving the market include the changing preferences of consumers, particularly millennials, for alcoholic beverages during social and cultural gatherings and celebrations, as well as the ease of product availability through online platforms and changing consumer lifestyles.
The industry has also seen increased demand for premium and luxury alcoholic beverages, fueled by the rising middle class with greater disposable incomes, growing urbanisation, and a desire for refined drinking experiences. Maharashtra, Karnataka, Telangana, Odisha, West Bengal, Delhi, Haryana, and Punjab are among India’s leading consumers of alcohol.
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Fundamental Analysis Of Som Distilleries & Breweries – Financials
Revenue and Net Profit:
The revenue from operations stood at Rs. 1,498.05 crore in FY23, compared to Rs. 656.21 crore in FY22. Net profits stood at Rs. 60.30 crore, which improved from a loss of Rs. 9.84 crore in the previous year.
Som’s revenue is an increasing trend from FY21 and the growth has more than doubled from FY22. The revenues were stagnant from FY19 to FY22. The excise duty in FY23 stood at 691.37 crore, compared to Rs. 291.05 crore.
As a percentage of revenue, the excise duty in FY23 increased to 46.15% compared to 44.51%. Net profits increased exponentially from FY22. Over the 5 years, the net profits fluctuated but in FY23 they improved significantly.
| Particulars/ Financial Year | Revenue from Operations (Cr.) | Net Profit (Cr.) |
|---|---|---|
| 2022-23 | ₹1,498.05 | ₹60.30 |
| 2021-22 | ₹656.21 | -₹9.84 |
| 2020-21 | ₹507.08 | -₹38.07 |
| 2019-20 | ₹711.61 | ₹15.02 |
| 2018-19 | ₹552.72 | ₹19.74 |
Profit Margins:
Som’s OPM stood at 10.71% in FY23, up from 0.77% in FY22. The NPM stood at 7.47% in FY23, recovering from -2.71% in FY22. Operating margins increased significantly from a thin margin in FY22. Employee costs decreased as a percentage of revenue in FY23. However, material costs increased YoY in FY23.
Overall, the OPM has gained a sustainable margin. Net profit margins have also improved since FY19. Over five years, the margins remained volatile. Other Income increased in FY23 when compared to the previous year.
| Particulars/ Financial Year | OPM (%) | NPM (%) |
|---|---|---|
| 2022-23 | 10.71% | 7.47% |
| 2021-22 | 0.77% | -2.71% |
| 2020-21 | -7.08% | -13.23% |
| 2019-20 | 7.88% | 3.26% |
| 2018-19 | 11.19% | 5.02% |
Return Ratios:
RoE stood at 16.06% in FY23, improving from -3.39% in FY22. In FY23, RoCE was 14.53%, up from 0.69% in FY22. The increase in returns in FY23 was due to higher net profits. Over the 5 years the returns have fluctuated and RoCE followed the same trend as RoE.
The increase in profits has led to better returns on additional capital for the company in FY23. RoCE in FY22 was positive due to profitability at the EBIT level thus resulting in thin returns.
| Particulars/ Financial Year | RoE (%) | RoCE (%) |
|---|---|---|
| 2022-23 | 16.06% | 14.53% |
| 2021-22 | -3.39% | 0.69% |
| 2020-21 | -13.51% | -4.90% |
| 2019-20 | 4.69% | 7.61% |
| 2018-19 | 6.35% | 10.42% |
Debt Analysis:
The D/E of the company stood at 0.65 times, compared to 0.68 times in FY22. In FY23, the interest coverage ratio was 6.48 times, up from 1.28 times in FY22. The debt-to-equity ratio has improved for the company YoY. However, the ratio is stable. However, lowering the debt in the upcoming years can help the company deleverage.
The company has indicated that it will take on loans to fund its growth. Interest coverage improved YoY on the back of better profits. Over the 5 years, the ratio was volatile and any greater than 3 times is considered safe based on the industry in which the company is operating.
Now we have come across the complete financials of the Fundamental Analysis of Som Distilleries & Breweries in a detailed view.
| Particulars/ Financial Year | D/E | Interest Coverage |
|---|---|---|
| 2022-23 | 0.65 | 6.48 |
| 2021-22 | 0.68 | 1.28 |
| 2020-21 | 0.63 | -0.38 |
| 2019-20 | 0.62 | 2.36 |
| 2018-19 | 0.48 | 3.54 |
Fundamental Analysis Of Som Distilleries & Breweries – Peer Comparison
Here are some of the peers for the comparison through ratios.
| Company Name | MCap (Cr.) | PE(TTM) | Revenue CAGR (5 Years) | Net Profit CAGR (5 Years) | ROE (TTM) | D/E |
|---|---|---|---|---|---|---|
| Radico Khaitan Ltd | 23,010 | 104.87 | 11.51% | 10.61% | 9.79% | 0.39 |
| India Glycols Ltd | 2,913 | 20.23 | -2.67% | 7.88% | 8.78% | 0.68 |
| Jagatjit Industries Ltd | 1,003 | 51.07 | 6.88% | - | 27.04% | 2.95 |
Fundamental Analysis Of Som Distilleries & Breweries – Key Metrics
Let’s look at some of the Key Metrics of Som Distilleries & Breweries
| Particulars | Amount | Particulars | Amount |
|---|---|---|---|
| CMP | ₹302.50 | Market Cap (Cr.) | ₹2,303 |
| Stock P/E (TTM) | 67.68 | EPS (TTM) | ₹4.39 |
| RoE (%) | 16.06% | RoCE (%) | 14.53% |
| Promoter Holdings (%) | 35.26% | FII Holdings (%) | 0.77% |
| Debt to Equity Ratio | 0.65 | Interest Coverage Ratio | 6.48 |
| Current Ratio (TTM) | 1.61 | Net Profit Margin (%) | 7.47% |
Fundamental Analysis Of Som Distilleries & Breweries – Future Plans
- The expansion of capacity to match orders in the beer facility in Hassan, Karnataka, which could add 60 lakh cases of capacity and is expected to be operational by April 2024.
- Entered into a strategic contract manufacturing agreement in Jammu and Kashmir for the production of IMFL for diversifying and strengthening market presence.
- Plans on setting up owned capacity or contract manufacturing for Rajasthan and Jharkhand markets by August or September 2024.
- Capacity expansion in Bhopal for setting up a new packing line with an expected investment of Rs. 5 crore.
- Som aims to make the Woodpecker brand a millionaire brand within the next two to three years.
- Som will borrow more money to fund the growth over the next 6 to 12 months with an estimated annual increment working capital requirement of around Rs. 20 to 25 crore.
These were the few future plans we have listed about the company under the topic Fundamental Analysis of Som Distilleries & Breweries.
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Conclusion
We will take a quick look at Fundamental Analysis Of Som Distilleries & Breweries now that we have reached the end of this article. The company has been performing better. Revenues and net profits have improved in recent years. However, the company runs on thin margins and possesses the risk of an increase in excise duty, Restrictions on pricing alcohol products can increase the pressure on margins due to inflationary pressures.
The government’s increase in duty charges must also be reviewed. With the increase in demand for alcohol demand in the country, the company might grow based on the brand value it possesses based on quality and promotion. What do you think about the company’s potential? Let us know in the comments section below.
Written by Santhosh
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The post Fundamental Analysis Of Som Distilleries & Breweries – Future Plans, Financials, And More appeared first on Trade Brains.
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