Toast to margins, demand recovery: Liquor firms see buzz after sober Q1

Reversal of fortunes could lift the industry's spirits

After underperforming its peers in the consumer space in 2022–23, and experiencing a mixed bag in the 2023-24 (FY24) April-June quarter (first quarter, or Q1), brokerages are positive about the medium-term outlook for liquor stocks. Higher raw material costs, concerns regarding increased duties, regulatory changes, and competitive pressures weighed on performance returns in the past quarters.

Analysts believe that the sector could experience a reversal of fortunes due to better demand and margin improvements.

Commenting on the sector’s performance after Q1FY24 results, analysts of Nuvama Research, led by Abneesh Roy, point out that events and marriages are back to pre-pandemic