*Globus Spirits – Q2FY22 Concall Update – Nirmal Bang Sec.*
*Outlook – Positive*
The stock is trading at 13.3x FY23E consensus earnings
• Economic activity has recovered to pre-COVID levels
• Performance was suffered due to plant closures – in Bihar tow facilities were has been closed since 15th of August this year, due to flooding caused by unprecedented rains in the region. The opportunity cost of this closure is estimated at about Rs 20 crs. Management expects this plant to re-start in December
• In addition, the plant shut down to critical maintenance at Haryana and West Bengal had an estimated contribution loss of about Rs 5 crs
• The company witnessed positive business mix wherein contribution from consumer business has increased to 47% from 42% in Q2FY21 on the back of the robust growth in volumes and realizations
• *Expansion is on track. The new facility in West Bengal with the capacity of 140 KL per day is expected to be operational this month and is likely to operate at full capacity from Q4FY22. Work in the Jharkhand factory is underway, and expected to be fully operational in Q1FY23. In Odisha, land acquisition is underway, and will be completed by end of December of this year*
• The company has received 10 yrs long-term volume allocation for its all units from OMC for Ethanol Supply
• *The company has planned to launch Black lace brand and Globus Green Whiskey brands in coming quarters. These are premium products and likely to aid margins*
• *Effective Tax rate would come down to 25% in FY23 from current 33%*
• Government has announced price hikes for molasses-based Ethanol and management expects that announcement on grain-based Ethanol would come in few days