Globus Spirits zooms 208% in 3 months on healthy outlook; hits new high

Shares of Globus Spirits hit a new high of Rs 1006.10, up 5 per cent on the BSE in the intra-day trade on Tuesday, having gained 12 per cent in the past three trading days, after the company said the new capacity additions and strong balance sheet is likely to take the company to new heights going forward.

In the past three months, the stock of Globus Spirits has zoomed 208 per cent as compared to a10 per cent rise in the S&P BSE Sensex. Currently, the stock is trading under the T group on the BSE. In the T2T segment, each trade has to result in delivery and no intra-day netting of positions is allowed.

Globus Spirits is the largest grain based Extra Neutral Alcohol (ENA) manufacturer in India with a capacity of 160 million litres. The company is also a supplier of Indian made Indian liquor (IMIL) and premium IMFL in India. IMIL segment comprised around 42 per cent of consolidated revenues, with the rest contributed by bulk alcohol (45 per cent) and others (botting and by-products). Total 80 per cent of IMIL sales occur in Rajasthan (32-33 per cent market share).

Globus Spirits, which disclosed its financial year 2020-21 (FY21) annual report on August 26, said that currently the company is at the stage where there is a plethora of opportunities. Macro-economic growth from structural changes in market dynamics should thrive the demand going forward. The large vaccination drive shall also help the economies move rapidly towards normalcy.

"During the fiscal, a slew of cost efficiency measures coupled with strategic growth initiatives helped the company generate healthy cash flows even during a challenging year. The cash generated from business has utilized towards strengthening of Balance sheet, both for funding capex as well as reduction of debt," it said.

The government's thrust towards ethanol blending will continue to drive demand in the bulk alcohol segment. The Centre has also achieved remarkable results in its ethanol blending targets during the fiscal and have advanced the blending target of 20 per cent to 2025 from 2030 earlier. This has created a new line of organic growth for the company.

"To capitalize on this opportunity, the Company has decided to undertake a strategic expansion of its capacities with the setting up of a 140 KLPD at West Bengal with total capital outlay of Rs 110 crore and is expected to be operational by Q3FY22. The company has also expanded the distillery capacity at Rajasthan from 140 KLPD to 160 KLPD and also looking to expand capacity in the states of Bihar by 140 KLPD and Jharkhand in the next year. This will take the overall distillery capacity from current 500 KLPD to 940 KLPD in the next 2-3 years," the company said.