Alcoholic Beverages - Oct24_IC.pdf (4.1 MB)
good initiating coverage report by DAM capital in alcoholic beverage industry in India and major segments & players in them
Target for Sula is given 560 with below valuation basis
Revenue to grow by 13.6% CAGR over FY24-27E: Sula has strategically reduced its
focus on distribution of ‘Third-party Brands’, the contribution of which came down
from Rs1,615 mn in FY20 to ~Rs366 mn in FY24. It divested its majority stake in
PADPL, a subsidiary involved in the trading of beer, spirits, and other liquor. This led
to a rise in the contribution of its own brands to the company’s total revenue from
~64% in FY20 to ~88% in FY24. Sales from own brands grew at ~13% CAGR over
FY20-24, driven by higher sales from ‘Elite and Premium’ segment which grew at
~16% CAGR compared to 5.6% CAGR for ‘Economy and Premium’ segment. We
expect Sula to deliver ~13% growth in the own brands business driven by
14.5%/~11% value/volume growth in Elite and Premium categories over FY24-27E.
Revenue from the Wine Tourism segment has grown at a 18% CAGR over FY20-24.
Room additions and tailwinds in the hospitality sector should see a continued
momentum in the hotels sector. Going ahead, we expect the Wine Tourism Segment
to grow at a 21.3% CAGR over FY24-27E.
At a consolidated level, we estimate ~13.6% CAGR in net revenues over FY24-27E.
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