Price – Rs. 755
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About the Company
GM Breweries Limited (“GM Breweries” or the “Company”) is engaged in the activities of manufacturing and marketing of Alcoholic Beverages; such as Country Liquor (CL) and Indian made Foreign Liquor (IMFL).
GM Breweries is the largest manufacturer of country liquor in the state of Maharashtra with a sizeable market share. The Company has fully automatic Bottling Plant at Virar, District Thane, in the state of Maharashtra with a capacity to produce 13.76 million bulk litres (~50000 cases).
The Company contributes about 25 to 30 % of the total Excise duty for country liquor in the whole of Maharashtra.
 G.M.SANTRA – Made from premium distilled molasses based rectified spirit of multi pressure vacuum distillation (MPVD) plant. Blended with the best orange flavours. Ruling at No. 1 Position amongst Country Liquor Industry for the past 12 years, in the State of Maharashtra.
 G.M.DOCTOR – One of its prestigious brands made from finely distilled vacuum distillation plant. Balanced blend with the toss of sugarcane juice spirit flavour. Ruling the market for the last 25 years.
 G.M.LIMBU PUNCH – A mixed punch blend of lemon and lime flavours, along with the most supervised quality of Rectified Spirit from MPVD plant. Again a toss of sweetness and sour taste maintained with the whiff of Indian spices and herbs flavours.
 G.M.DILBAHAR SOUNF – Superior blend of extract fine distilled rectified spirit and anise flavour, added all spices flavours and herbs flavour for additional palate.
Revenue (In Rs. Cr.)
EBITDA (In Rs. Cr.)
PAT (In Rs. Cr.)
EPS (In Rs.)
EPS Growth Rate
Historic P/E (Closing Price of 31st March)
CURRENT P/E (based on price of 24th May – Rs. 755.50 and EPS – Rs.49.86)
On 5 April, 2018, the Company recommended bonus shares in the ratio of 1:4 . i.e. one share of Rs. 10/- each for every four share.
Negligible Competition in the Country Liquor Space
GM Breweries is the single largest manufacturer of country liquor in the State of Maharashtra and its brands enjoy a virtual monopoly across Mumbai, Thane and Palghar regions. The Company commands a state wide market share of ~25% (70% Mumbai & Thane). In the listed space, the Company competes with Globus Spirits and Som Distilleries.
Growth Opportunities With Limited Capex
Currently, the Company has a capacity of 13.76 Cr. bulk litre of country liquor per annum. For FY 2018, the Company utilised mere half of the capacity (49.20%). The Company is taking all possible steps to utilize the surplus capacity by extending its business to interior districts of Maharashtra taking advantage of its brand image.
Debt Free Status| Better margins and is available at 60% discount to industry P/E multiple.
Lower Molasses Prices
As per news reports, molasses prices has corrected 70% in the past one year and 45% since the beginning of 2018. Steep correction in the price of molasses would enable lower costs for the Company and better margins.
Competition from IMFL (Indian Made Foreign Liquor brands)
Although the Company is available at attractive valuations but has its presence in country liquor and caters to Maharashtra only. Any policy change in the state will hit the Company’s revenue and margins profile.
About the Author
Rajat Sharma is a well known stock market analyst and commentator. He has covered Indian markets for over a decade and is regarded for consistently identifying early stage investment opportunities. Attorney by qualification, Rajat has done extensive work for improving corporate governance and disclosure standards.Follow @SanaSecurities