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Dalmia Securities
Globus Spirits (Buy)
CMP: ₹158.70
Target: ₹199
Globus Spirits Ltd (GSL) is engaged in manufacturing, marketing and sale of Indian made Indian liquor (IMIL), Indian made foreign liquor (IMFL), bulk alcohol and contract bottling for established IMFL brands. The company has a well-established presence in the IMIL segment and set to become pan-India IMIL leader with launch of distilleries in Bihar and West Bengal.
GSL’s revenue increased by 11.68 per cent y-o-y to ₹225.14 crore in Q2FY19. The company’s bulk alcohol revenue rose by 31.4 per cent y-o-y to ₹94.9 crore in Q2FY19 driven by higher capacity utilisation. However, its IMIL sales reduced by 6.7 per cent to ₹97.5 crore in Q2FY19 due to lower volumes in Haryana and Rajasthan.
We believe GSL will grow at a faster pace with restart of Bihar facility. GSL also enjoys strong brand value in Rajasthan and Haryana. Incremental revenue growth with negligible capex, better cost management and margin focus, will lead to better profitability and improve return ratios going forward.
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