Allied Blenders and Distillers Limited is the largest Indian-owned Indian-made foreign liquor ('IMFL') company and the third largest IMFL company in India, in terms of annual sales volumes between Fiscal 2014 and Fiscal 2022. They are one of the only four spirits companies in India with a pan-India sales and distribution footprint, and a leading exporter of IMFL, and had an estimated market share (in terms of sales volume) of 11.8% in the Indian whisky market for Fiscal 2023. The flagship brand, Officer's Choice Whisky was launched in 1988 with the entry into the mass premium whisky segment. Officer's Choice Whisky has been among the top selling whisky brands globally in terms of annual sales volumes between 2016 and 2019. Over the years, they have expanded and introduced products across various categories and segments. As of December 31, 2023, the product portfolio comprised 16 major brands of IMFL across whisky, brandy, rum and vodka. Certain of the brands, such as, Officer's Choice Whisky, Sterling Reserve, Officer's Choice Blue and ICONiQ Whisky, are 'Millionaire Brands' or brands that have sold over a million 9-litre cases in one year. Company has over the years established market leadership in the alcoholic beverages market in India with a market share of 8.2% in IMFL market by sales volumes in Fiscal 2023, with sales across 30 States and Union Territories, as of December 31, 2023. Over the years, they have developed an extensive pan-India sales footprint and as of December 31, 2023 they have 12 sales support offices, and pan-India route-to-market capabilities covering all channels and alcohol permitted States and Union Territories. As of March 31, 2023, the products were retailed across 79,329 retail outlets across 30 States and Union Territories in India. In addition, as of December 31, 2023, they exported the products to 14 international markets, including countries in the Middle East, North America, Africa, Asia and Europe. Company owns and operates the distillery located in Rangapur, Telangana that is spread over 74.95 acres with a built-up area of over 25,000 square meters. The in-house distillation capacity of extra neutral alcohol ('ENA'), the key material used in the manufacture of the products, is 600.00 lakh litres per year. They also have extensive bottling capabilities across India. As of December 31, 2023, they relied on 32 bottling facilities, including bottling facilities owned and operated by them and contract bottling facilities both on exclusive and non-exclusive basis, for bottling the products. As of December 31, 2023, they owned and operated nine bottling units, and had entered into arrangements with five third-party bottling facilities where the entire licensed capacity is utilized by them. As of December 31, 2023, they have entered into 18 bottling agreements on a non-exclusive basis including one where they have entered into a royalty arrangement dated March 30, 2021 with a third-party manufacturer for a period of five years to manufacture, blend, bottle, process and package the products at its distillery under the brand name for which royalty is paid to the Company. As per financial performance, Allied Blenders and Distillers Limited has posted total income / net profits of Rs 6,397.81 Cr / Rs 2.50 Cr (FY21), Rs 7,208.16 Cr / Rs 1.47 Cr (FY22), Rs 7,116.74 Cr / 1.60 Cr (FY23) and Rs 5,914.97 Cr / Rs 4.22 Cr (Q3 FY24). So as per previous financials data, company has shown almost static results with very low net-profit margin. Company has an average EPS of Rs 0.07 and average RoNW of 0.43% for last three fiscals. Issue is priced at a P/BV of 16.77 as per NAV of Rs 16.76/- as on 31.12.23. If we attribute latest earnings of FY22, FY23, TTM and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 5324, 4909, 2665 and 1393 respectively, which looks very aggressively priced. As per RHP, comparison between listed peers is given in above table. On BRLM's front, three lead managers are associated with this IPO, and have handled around 57 IPOs in last three fiscals. ICICI Securities Limited: This is 43th main board IPO from this BRLM. From last 10 IPOs, three opened below issue price and remaining opened above issue price or at par, on the day of listing. As of now, from last 10 IPOs, two are trading below issue price and remaining are trading above issue price. (As on 20.06.2024) Nuvama Wealth Management Limited: This is 14th main board IPO from this BRLM. From last 10 IPOs, two opened below issue price and remaining opened above issue price or at par on the day of listing. As of now, from last 10 IPOs, six are trading below issue price and remaining are trading above issue price. (As on 20.06.2024) ITI Capital Limited: This is 3rd main board IPO from this BRLM. From last 2 IPOs, one opened below issue price and remaining opened above issue price or at par on the day of listing. As of now, from last 2 IPOs, all are trading above issue price. ( As on 20.06.2024) As per financials, Allied Blenders and Distillers Limited has shown almost static results, RoNW is 0.39% and P/E is respectively 4909.18, 2728.08 and 2046.06 as per FY22, FY23, TTM and annualised FY24 earnings. So, issue looks aggressively priced. Also the reason for IPO is repaying debt. Company is in business of liquor, which is highly competitive and fragmented business segmented. Performance of BRLM is good. So, we give AVOID rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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