Hope you are doing well.
If you enjoy your beer, you might be interested in reading about Som Distilleries Breweries which commands the highest market share in the Beer segment in the state of Madhya Pradesh.
The company also has presence in the states of Karnataka, Orissa, Kerala and recently entered the markets of Delhi and Uttar Pradesh.
Below, we have shared notes from the Q3 FY 23 con-call transcript of the company:
Before that, few days back, we released our New Stock Recommendation for Alpha and Alpha + Members
It's a 1000 crore market cap stock, one of the largest players in its segment, has great operating performance track record, expanding aggressively and available at only ~10 times pre-tax earnings
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Som Distilleries - Notes from Q3 FY 23 con-call transcript
- General Points
- Our company has shown significant growth in sales with over 100 lakh cases of beer being sold in the past nine months
- We held 14% of Karnataka's whole bear market share in October '22
- We are doing pretty well in Orissa. We are close to about 12% in Orissa currently for the nine months
- Delhi and UP are new markets for us. This year our main concentration has been on our home markets, that is MP, Karnataka, Kerala and Orissa for that matter
- During the quarter, we sold a total of 26 lakh cases of beer and 3 lakh cases of IMFL resulting in an income of 1,510 million
- Our flagship brands Hunter, Black Fort, and Power Cool saw strong sales volume
- The expansion of the company's customer base and overall volume was a result of both an increase in sales in markets where the company already had a presence, as well as the company's success in increasing sales from new markets
- Power Cool, in fact, has been doing exceedingly well in Karnataka where we are gaining market share. That is one of the reasons why the contribution of Power Cool is increasing
- The maximum traction which happens is between Black Fort and Power Cool. Hunter, unfortunately, is taking it some time to pick up
- This summer we will launch Woodpecker in a big way, and we are doing exceedingly well in the draught beer space through Woodpecker in Bangalore and around
- The Woodpecker plant, the Hassan plant (Karnataka) is running at above 100% currently. Bhopal for the whole year would be close to about 55%, and the plant at Orissa would be close to 40%
- The existing capacity can give us a turnover of about 1,100 crores (of beer), and the additional capacity which we are putting up can give us another maybe 150 to 200 crores
- 100 crore capex - I think the Bhopal plant will cost us about 58 odd crores, and the Hassan plant would be about close to Rs 43-44 crores. Expected to be ready by Q1 FY 24.
- So we are actually doubling the capacity in Karnataka, from 45 lakh cases going up to 90 lakh case. Bhopal, the capacity will remain the same, except that we will have another canning facility coming up
- The canning facility realization is much higher than per case pieces of a bottle (~20%), and there are certain markets which have got a higher saliency towards cans
- Preferential issue to promoters
- It was said that there was a lesser needs of funds towards CAPEX in the company, and as such, the preferential issue was deferred. Instead, it was decided that we continue with the right issue to give the existing minority investors the opportunity to be a part of the growth story of the company
- The promoters are also willing to take up any unsubscribed portion of the right issue
- This step will also lead to lesser dilution of equity, which was a cause of concern for some investors
- We should be ideally placed to answer that question after we declare our Q4 results. But I expect that we should grow by about 20% to 25% in terms of revenue for next year
- We still, I mean, are very hopeful that we will grow further in our existing markets of MP, Orissa, Karnataka and Kerala, though we are also looking at, like you rightly said, at Uttar Pradesh and Delhi to fuel our growth further
Disclaimer: This is not a recommendation to buy/sell Som Distilleries. These notes are as announced by the companies on exchanges and only for the purpose of information and education.
SEBI Research Analyst Registration No. INH100001690
Research Analyst Details
Name: Ekansh Mittal Email Id: [email protected] Ph: +91 727 5050062
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