Som Distilleries and Breweries

In the current situation, we can explore different possible outcomes:

1. Worst-Case Scenario (10% Probability):

• Promoters might be evading tax, and the IT department could catch them. This could lead to hefty fines or prosecution.
• The stock market may react negatively, causing a short to medium-term decline in stock prices. However, recovery is possible in the coming quarters due to strong company performance.
• Liquor companies generate revenue from state government sales, so they are likely to meet their revenue targets over the next 6-9 months.
• Retail investors may forget about the raid and resume investing, as seen in the past (2021, 2020).

2. What Usually Happens (50% Probability):

• Experienced promoters may opt to pay fines or reach settlements, avoiding legal troubles. IT may find something small, rather too small.
• Stock prices may experience short-term fluctuations but could recover, considering the promoters’ past experience in dealing with such situations.
• The fact that this is not the first raid and no previous prosecutions occurred may provide reassurance.

3. Best-Case Scenario (40% Probability):

• The IT department’s raid may not uncover any wrongdoing, allowing promoters to maintain their reputation.
• Promoters may highlight their strong corporate governance and accounting practices.
• This positive outcome may lead to a favorable stock price reaction.

It’s important to keep in mind that these scenarios are speculative, and the actual outcome will depend on multiple factors, including the findings of the IT department, legal proceedings, market sentiment, and the broader economic landscape.

Individual investors should conduct thorough research, consider their risk tolerance, and make investment decisions based on their financial goals and personal circumstances. Staying informed through reliable sources, closely monitoring the situation, and being prepared for different outcomes are advisable. Consulting with a financial advisor or an expert in such matters can also be beneficial when making investment decisions during uncertain times.

FYI Look what HDFC securities is saying about SDBL. They have given a buy rating today. Its HDFC, not some immature investor who doesn’t know which side of gun he/she is using to aim, what they are aiming at and when to fire.

The Hindi news from Bhopal indicated that IT didn’t find anything is giving excuses now. The raid was to probe tax evasions, most likely politically motivated.