Hello Sir,

Hope you are doing well.

Recently I came across Associated Alcohols & Breweries.

The stock came to our notice because of its ongoing capex of 40 Million Liters per annum Ethanol plant which is likely to commence operations from next month, i.e. Oct’23.

The company has its proprietary brands in the IMFL segment and is also the contract manufacturer of very renowned brands like – Black Dog, VAT 69, Smirn Off, etc.

Below, we have shared interesting insights from the Q1 FY 24 con-call of the company. Hope you find the details useful for your own investments or to add the stock to your watch list.


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Associated Alcohols & Breweries – Insights from Q1 FY 24 con-call of the company

– Q1 FY 24 performance

  • In Q1 FY24, the revenue stood at INR 156 crores, a decline of 15% on a Y-o-Y basis. This is due to change in the MP government policy around IMIL segment
  • The revenue share of the company from IMFL segment stood at 44% in the current quarter and we are continuously striving to increase further influence in the future


  • In this year in the tender, the government had limited the quantity a particular individual can take
  • Whatever the highest volume was there. So, we have been able to take that kind of market share
  • On a positive note side, we were able to take around a 20%-25% increase in the price in IMIL. So, that has helped us increase our margins also
  • IMIL is basically a state subject. We cannot move into other states because it is a low value product

– IMFL Proprietary

  • This sluggish performance in Q1 is due to industry being down slightly in Madhya Pradesh
  • In terms of the Kerala market which we have created as one of the largest market similar on the lines of Madhya Pradesh, the volume has increased
  • The volumes in Kerala is almost equivalent to the volumes what we are doing in Madhya Pradesh
  • In Kerala we are the fourth largest player in the market right now and we are trying to replicate in certain other markets also
  • Very soon we will be entering a few other states like Goa, Pondicherry, Orissa and Assam

– Franchise/Licensing

  • We are doing only franchisee of Diageo in the states of Madhya Pradesh
  • In other states, wherever we are entering, we are entering with only our brands. So, that is purely a premium product category, which we are doing

– Raw material

  • We continue to face inflationary pressures on critical inputs like grain and glass
  • Encouragingly, glass price indicates slight early signs of decline; however, the grain prices are expected to remain at an elevated level
  • Our plant is fungible to we can use any sort of grain whether it is rice, maize or sorghum. So, we look into the profitability and the costing point and accordingly we decide which grains to be used

– New things

  • Our primary focus is to enter new geographies, launch new brands in premium category and continue to scale up distribution and visibility in the launch market
  • We have premium products in pipeline and expected to launch craft Gin in a month or two
  • Company has aligned its portfolio to launch 2-3 premium brands in next 1-2 quarters


  • the much-awaited ethanol facility is currently in the trial stage and we are expected to commence operation from Oct’23
  • In the very initial days, we will be able to supply it and utilize the plant to the 100% capacity and our plant is at 1,25,000 liters per day capacity
  • We have already applied and we have already registered ourselves for the sale purchase agreement with the BPCL and IOCL and as soon as the plant starts manufacturing it and all, we will get a purchase order from them

– Guidance

  • Current EBITDA what we have reported of 11.8% in this quarter will be in the similar lines
  • With the Increase in the premium segment products, we are confident that we will be able to reach that level (16-18%) in next 2 to 3 years
  • We are definitely looking at exporting our own products which we have tie up with one or two players



Disclaimer: This is not a recommendation to buy/sell Associated Alcohols & Breweries. The securities quoted are for illustration only and are not recommendatory.


Best Regards,

Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.com/


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