Allied Blenders & Distillers Limited IPO: Get Date, Price, Review and Details

Introduction:

It is an Indian-made foreign liquor (IMFL) producing company and a leading exporter of IMFL, with an estimated market share of 11.8% in the Indian whisky market.

Its product portfolio comprises of 17 major brands of IMFL across whisky, brandy, rum, and vodka.
Some of its ‘Millionaire Brands’ are:

• Officer's Choice
• Officer's Choice Blue
• ICONiQ Whisky

Millionaire Brands are those brands that have sold over a million 9-litre cases in one year.

IPO Details:

Objects of Issue:

• Repayment/prepayment of certain outstanding debt.
• Balance for General Corporate Purposes

Key Strengths:

• It is one of the India's largest IMFL companies with a diverse and modern product portfolio.

• It has large, advanced manufacturing facilities strategically located with a modern research and development center.

• The distillery in Rangapur, Telangana, covers 74.95 acres.
• It has 32 bottling facilities through a mix of owned and third-party facilities, with a pan India presence, as of December 31, 2023.

• Well-positioned to capture tailwinds in the Indian IMFL industry.

Risks:

• The company heavily relies on a few states for revenue, with West Bengal, Telangana, and UP accounting for 38.85% of total revenue as of March 31, 2023. A drop in sales in these states could significantly impact the business and financial condition.
• Relying on a few customers for a significant portion of revenue, the top 2 customers accounted for 23.17% of operations as of March 31, 2023.
• Distillers are functioning with more than 94% capacity utilization, in order improve the sales company would need to incur capex which would further compress the margins and deteriorate the bottom line.
• The operations are heavily regulated by central and state laws. Regulatory changes could increase costs or restrict our activities.

Financial Snapshot:

 Conclusion:

The rising percentage of population for legal drinking age is expected to increase the per capita alcohol consumption. Also, greater social acceptance of alcohol, rapid urbanization of tier II cities, and a shift from country liquor to IMFL due to higher disposable incomes. These all factors would contribute for the growth in the industry.

Comparing the EBITDA & PAT Margins, EPS, and ROE with some of its listed peers such as United spirits, Radico khaitan, and Globus Spirits the valuations of this company seems to be higher.

Considering the company’s financials, valuations, and growth potential we would suggest our investor to avoid this IPO.