Globus Spirits zooms 17%; Why are most liquor stocks rising in trade today?

Globus Spirits shares zoomed 17 per cent in Monday's trade on BSE, logging an intraday high at Rs 930.9 per share. The buying interest in the stock sparked after the company said the Ministry of Consumer Consumer Affairs, Food & Public Distribution has reduced the price of rice for supply to ethanol distilleries.

 

Around 11:39 AM, Globus Spirits Ltd share price was up 14.51 per cent at Rs 910.45 per share on BSE. In comparison, the BSE Sensex was up 0.79 per cent at 77,222.28. The market capitalisation of the company stood at Rs 2,630.14 crore. The 52-week high of the stock was at Rs 1,373.35 per share and the 52-week low was at Rs 656.1 per share. 

 

Around the same time, among liquor stocks, United Breweries was up 4.28 per cent, Radico Khaitan was up 0.52 per cent, Som Distilleries was up 0.37 per cent, and Allied Blenders and Distillers was up 1.86 per cent. 

 

As per the company filing, the price of rice for supply to ethanol distilleries was reduced to Rs 22.50 per Kg as compared to the earlier rate of Rs 28 per Kg. 

 

"We would like to inform you that, the Ministry of Consumer Consumer Affairs, Food & Public Distribution has notified a reduction of price for rice for supply to ethanol distilleries from Rs 28 per Kg to Rs 22.50 per Kg vide their notice dated January 17, 2025," the filing read. 

How will the move benefit liquor stocks?

Some alcoholic beverages, especially certain types of spirits are made from rice or rice by-products. A reduction in rice prices can lower the cost of raw materials used in the production of these drinks, leading to reduced overall production costs for the company.

 

InCred Equities reinforces a positive outlook on grain-based ethanol, driven by the adjusted rice policy and substantial orders from oil marketing companies (OMCs).

 

It further added: While Food Corporation of India (FCI) rice availability is a positive factor, relying solely on it is considered disastrous for ethanol companies.

 

The brokerage prefers the grain-based distillation business as it is believed to be the primary source of ethanol for fuel blending in Ethanol Supply Year (ESY) 2025. 

 

Moreover, the sector is expected to consolidate, with established players best positioned for success. Concerns about feedstock availability have been addressed by previous reports highlighting strong maize crop yields and substantial growth in the current kharif season.

 

On Friday, the government reduced the reserve price of FCI rice under the Open Market Sale Scheme (OMSS) by Rs 550 per quintal to Rs 2,250 for states and ethanol producers to boost sales and support food security measures.

 

According to a Food Ministry order, state governments and state-run corporations can purchase up to 12 lakh tonnes, while ethanol distilleries are allowed to buy up to 24 lakh tonnes at a reduced rate. The previous reserve price was Rs 2,800 per quintal for both categories.

 

The Food Corporation of India (FCI), which manages rice stocks through weekly e-auctions, will implement the revised policy until June 30, 2025.