Standalone performance for quarter ended March 2017

The net sales have de-grown by 8% to Rs 1112.7 crore. The Supreme Court order directing all outlets within 500 meters of national and state highways to close from April had significantly impacted on the industry in quarter 4. The industry saw a decline of about 13%.

OPM has decreased by 130 bps to 9.1% due to rise in raw material cost to adjusted net sales. As a result, the operating profit has decreased by 20% to Rs 101.12 crore.

Other income has declined by 86% to Rs 4.25 crore. The interest paid declined by 20% to Rs 14.44 crore. The depreciation increased by 30% to Rs 83.31 crore. The profit before tax has decreased by 90% to Rs 7.62 crore.

The tax outgo decreased by 96% to Rs 0.89 crore. Tax rate declined from 29.16% to 11.68%. The net profit declined by 87% to Rs 6.73 crore.

Standalone performance for year ended March 2017

The net sales decreased by 2% to Rs 4734.12 crore. Beer industry saw lower volume as a result of steep duty increases in multiple states, the impact of demonetization and the impact of the anticipated cancellation of liquor licenses within 500 meters of national and state highways from April. The company volume declined by 2.5% vs industry fall of 5%.

The company gained market share in North, South and the East, whilst it held market share in the West.

Growth in the Southern region was driven by Andhra Pradesh and Telangana where the company gained market share, however Karnataka saw a drop in volume with the company holding market share. In Tamil Nadu supplies resumed in March 2017, after having received no orders from state corporation TASMAC for about 6 months.

Growth in the East was driven by the West Bengal, Orissa and Jharkhand markets, however prohibition in Bihar resulted in a complete stoppage of the industry during the year.

In the west, the industry declined across markets with the company holding shares.

OPM has decreased by 80 bps to 13.5% due to rise in raw material cost to adjusted net sales. As a result, the operating profit has decreased by 7% to Rs 641.17 crore.

Duties as a percentage of revenue were 54% vs 50% last year. The increase in duties, combined with the volume decline in some of the larger markets as well as upward pressure on the input costs resulted in a decrease in operating profit.

Other income has declined by 40% to Rs 51.60 crore. The interest paid declined by 28% to Rs 58.65 crore due to better working capital management. The depreciation increased by 18% to Rs 286.95 crore. The profit before tax has decreased by 23% to Rs 347.17 crore.

The tax outgo decreased by 24% to Rs 117.84 crore. Tax rate declined from 34.31% to 33.94%. The net profit declined by 23% to Rs 229.33 crore.

Consolidated performance for year ended March 2017

The net sales decreased by 2% to Rs 4729.19 crore. OPM has decreased by 80 bps to 13.6%. As a result, the operating profit has decreased by 7% to Rs 642.12 crore. The profit before tax has decreased by 23% to Rs 348.13 crore. The net profit after considering minority interest declined by 23% to Rs 229.57 crore.

The mgmt expects the impact of this ban to be most significant in the first 2 quarters of FY18. The magnitude of the impact on sales volume depend on the extent of potential mitigating actions by state government, including the option offered to outlets to relocate to an alternative location or efforts to de-notify certain state highways, which remains uncertain.

Valuation

The total promoters holding in the company stand at 73.87%.

The scrip is trading around Rs 797.35 at BSE.