GM Breweries, Sula zoom upto 19% despite excise duty hike on liquor in Maha

GM Breweries, Sula Vineyards share prices rallied today after the Maharashtra government announced a sharp hike in state excise duties on liquor, exempting wine and beer from the duty hike

GM Breweries, Sula Vineyards share prices rise today

 

Share prices of GM Breweries and Sula Vineyards rallied up to 19 per cent on the BSE in Wednesday's intraday trade after the Maharashtra government announced a sharp hike in state excise duties on liquor, exempting wine and beer from the duty hike.

 

Among individual stocks, GM Breweries shares zoomed 19 per cent to ₹849.30 on the BSE in the intraday trade amid heavy volumes. At 10:34 AM, the stock price of the smallcap liquor company was trading 17 per cent higher at ₹837.65 as compared to 0.16 per cent rise in the BSE Sensex. Average trading volume on the counter jumped multi-fold with nearly 1.85 million shares, cumulatively, changing hands on the NSE and BSE.

 

 

Shares of Sula Vineyards, meanwhile, soared 13 per cent to ₹335.45 on the back of over 16-fold jump in average trading volumes. A combined 7.8 million equity shares changed hands on the NSE and BSE.   

Maharashtra state cabinet hikes excise duty on IMFL

 

Maharashtra state cabinet, on Tuesday, approved to hike excise duty on Indian Made Foreign Liquor (IMFL), country liquor, and imported alcohol. According to reports, the excise duty on IMFL has been increased by 50 per cent from 3x of the manufacturing cost to 4.5x. The duty on country liquor has also gone up from ₹180 to ₹205 per proof litre. This is the first revision of excise duty in Maharashtra since 2011.

 

However, in a major relief for consumers and certain manufacturers, beer and wine have been left out of the duty hike. The government also cleared the introduction of a new category 'Maharashtra Made Liquor' (MML) in a bid to expand the state's revenue base.

 

The newly announced 'MML' category aims to fill the pricing gap between country liquor and IMFL. It will be made from grain-based alcohol, and only products manufactured and registered within the state will qualify. National or foreign brands will not be eligible for inclusion. MML will have a country liquor tax structure but will only be sold through liquor vending (FL-2) and on-premise sale (FL-3) licensees.

 

GM Breweries is engaged in the manufacture of alcoholic liquor. Though the company has got the facility to blend and bottle both Indian made foreign liquor and country liquor, the concentration has been mainly on country liquor during this year due to competitive market conditions in the IMFL segment. The company has been making steady progress in the business of country liquor during the past years.

 

The State Excise Department shows that the company contributes about 25 to 30 per cent of the total Excise duty for country liquor in the whole of Maharashtra.

 

Sula Vineyards, on the other hand, is principally engaged in the business of manufacture, purchase and sale of premium wine and other alcoholic beverages.

 

Liquor sector outlook in India

 

Over the next few years, the Indian Alcoholic Beverage market is expected to grow at 6.9 per cent compounded annual growth rate (CAGR), in volume terms, from 1,068 million cases in CY 2023 to ~1,500 million cases in CY 2028. Key growth drivers are growing disposable incomes, increase in per capita alcohol consumption, rising number of women drinkers and cultural change, rising number of different alcohol brands and categories, expansion in distribution of alcohol across the country, especially in Tier 2 and below cities.

 

Going forward, the Indian wine market is expected to grow at ~15 per cent CAGR over CY 2023- 2028 led by the increasing prosperity and disposable income, rapid urbanization, evolving consumer preferences and increase in number of working women and women drinkers, Sula said in its FY25 annual report.