Multibagger liquor stock fell 24% from 52-week high; where is it headed?

Shares of Globus Spirits Ltd have rallied 263% in the last three years. The multibagger stock, which closed at Rs 247.8 on September 11, 2020 ended at a high of Rs 899.60 on the BSE in the previous session (September 12, 2023). An amount of Rs 1 lakh invested in the shares of Globus Spirits three years ago would have turned into Rs 3.63 lakh today. In comparison, Sensex has risen 73.01 per cent during the period. 

In the previous session, the liquor stock closed 2.39% lower at Rs 899.60 on BSE. Globus Spirits stock opened higher at Rs 923.05 on Tuesday against the previous close of Rs 921.65 on BSE. The stock hit a 52 week high of Rs 1326.25 on July 7, 2023 this year. Since then, the stock is down 24.20% till date. The stock fell to a 52 week low of Rs 700 on November 15, 2022. 

Total 8771 shares of the firm changed hands amounting to a turnover of Rs 79.79 lakh on BSE. Market cap of the firm fell to Rs 2591.10 crore on BSE.       

In terms of technicals, the relative strength index (RSI) of the Globus Spirits stock stands at 38.7, signaling it's trading neither in the overbought nor in the oversold zone. Globus Spirits shares have a beta of 0.6, indicating very low volatility in a year. 

The multibagger liquor stock has risen 0.40% in one year and gained 5.47% since the beginning of this year. The share has lost 29% in three months.  

11 promoters held 51.01 per cent stake in the firm and 78,443 public shareholders owned 48.99 per cent for the quarter ended June 2023. Of these, 75,502 resident individuals held 62.51 lakh shares or 21.70% stake with capital up to Rs 2 lakh. Only 19 resident individuals with 3.13% stake held capital above Rs 2 lakh for the quarter ended June 2023. 

Financial Performance     

In the June 2023 quarter, the firm reported a rise in standalone revenue to Rs 572 crore against Rs 497.1 crore revenue in the corresponding quarter of previous fiscal. Profit rose  4.05% to Rs 38.77 crore in the June 2023 quarter against Rs 37.27 crore in the June 2022 quarter. Operating profit climbed to Rs 72.3 crore for the quarter ended June 2023 against Rs 68.6 crore in the corresponding quarter of the previous fiscal.   

Here’s a look at the stance of brokerages on the outlook of the stock.  

Incred  Equities sees the stock climbing to Rs 2929 in a bull-case scenario target and has assigned a target of Rs 1,640 in a bear-case scenario. It valued the stock at 8.5 times FY25F P/E.  

The brokerage expects the following business triggers to watch out for in coming months for the liquor major.  

a. Expansion in gross profit margin due to a rise in the selling prices of Indian Made Indian Liquor (IMIL) and softening broken rice and energy costs. 

b. Stabilization of its newly commissioned plant in Jharkhand. 

c. Completion of expansion projects in Bihar and West Bengal. 

d. Foray into new markets in the Indian Made Foreign Liquor (IMFL) segment. 

e. Launch of new products in the IMFL segment. 

 Nomura has revised its target price of Rs 1,146 from the earlier Rs 1,260 based on 10xFY25EEPS. 

“We expect  a  tepid operating  performance in  Q2FY24 owing  to the shutdown  of  plants  in  Jharkhand  and West Bengal and unavailability  of  grains  from  FCI(from  July). Post  Q2FY24,  the  positive  impact from capacity additions, price hikes in Rajasthan,and revenue from newer geographies will be visible. EBITDA margin in FY24 may remain 14%,but will jump to over 17% in FY25 backed by price hikes and changes in the product mix. Given a subdued H1FY24, we have reduced our FY24/FY25 earnings estimate by 25%/9%. Our revised earnings forecast suggests a revenue/PAT CAGR of 23%/64% over FY23–25. We maintain ‘Tactical BUY’ with a revised target price of Rs 1,146 (earlier: Rs 1,260) based on 10xFY25EEPS,”said the international brokerage. 

About the Company     

Globus Spirits is primarily engaged in the business of manufacturing and sale of Indian Made Indian Liquor (IMIL), Indian Made Foreign Liquor (IMFL), Bulk Alcohol, Hand Sanitizer and Franchise Bottling. 

 

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