Allied Blenders and Distillers IPO Review 2024: Allied Blenders and Distillers Limited is coming up with its Initial Public Offering. The IPO will open for subscription on June 25, 2024, and close on June 27, 2024. In this article, we will look at Allied Blenders and Distillers IPO Review 2024 and analyse its strengths, weaknesses, financials and GMP. Keep reading to find out! 

Allied Blenders and Distillers IPO Review – About The Company

Incorporated in 2008, Allied Blenders and Distillers Limited is the largest IMFL (Indian-owned Indian-made foreign liquor) company and the third-largest IMFL company in India, in terms of annual sales volumes between Fiscal 2014 and Fiscal 2022.

In recent years, the company has developed a product portfolio consisting of 16 major brands of IMFL, including whisky, brandy, rum, and vodka. Some of its brands, such as Officer’s Choice Whisky, Sterling Reserve, Officer’s Choice Blue, and ICONiQ Whisky, are known as ‘Millionaire Brands’ because they have sold over a million 9-litre cases in a single year.

The company owns a distillery in Rangapur, Telangana that covers 74.95 acres with a built-up area of over 25,000 square meters. It also has an in-house distillation capacity of 600.00 lakh litres of extra neutral alcohol (“ENA”) per year, which is used in the manufacture of its products. 

Note: If you want to learn Candlesticks and Chart Trading from Scratch, here’s the best book available on Amazon! Get the book now!

telegram channel

Furthermore, the company also has extensive bottling capabilities, with a total of 32 bottling facilities, including nine that it owns and operates, and arrangements with five third-party bottling facilities. 

As of FY23, the company has established market leadership in the alcoholic beverages market in India with an 8.2% market share in the IMFL market by sales volumes. 

The company’s sales cover 30 States and Union Territories with 12 sales support offices across India and route-to-market capabilities. Additionally, it has exported its products to 14 international markets across the Middle East, North America, Africa, Asia, and Europe.

Allied Blenders and Distillers IPO Review – Industry Overview

India’s alcoholic beverage market has been growing rapidly, with per capita consumption increasing from 1.3 litres in 2005 to 3.2 litres in 2023. This, coupled with positive demographic factors, makes India an attractive market with significant potential for future growth.

IMFL is the largest segment of the Indian alcohol beverage market in both volume and value terms. In Fiscal 2023, the IMFL segment recorded sales of 395 million cases, showing a recovery from the pre-COVID levels of 355 million cases in Fiscal 2020. 

The sales volume of IMFL is projected to reach 520 million cases by Fiscal 2028. Additionally, IMFL sales by value were estimated at ₹2,206,620 million in Fiscal 2023, and it is projected to reach ₹3,371.89 billion by Fiscal 2028. 

The IMFL sales value is expected to grow at a Compound Annual Growth Rate (CAGR) of 9% between Fiscal 2023 and Fiscal 2028, while the sales volume is expected to grow at a CAGR of 5.7%.

Allied Blenders and Distillers IPO Review – Financial Highlights

If we look at the financials of Allied Blenders and Distillers, we can see that its operating revenues have increased from ₹6,378.77 crores in FY21 to ₹7,105.68 crores in FY23. However, it should be noted that almost half of the revenue earned includes excise duty charges which is to be paid to the government.

Conversely, the net profits of the company show a decline in comparison. During FY21, the company reported a net profit of ₹2.5 crores which has declined to ₹1.6 crores in FY23. 

The net profits show that the company is operating on very thin margins. The low margins can mainly be attributed to the high excise duty and high borrowing costs of the company. 

As of the nine months ended of FY24, the company has earned a revenue of ₹5,911.14 crores and has retained a profit of ₹4.2 crores.

As of FY23, the company reported an ROE of 0.39% and RoCE of 25.87%. The low ROE is a result of the company’s low margins due to the reasons mentioned above. The high ROCE of the company indicates that the company is utilising its resources efficiently.

Furthermore, the company’s Net debt-to-equity ratio stood at 1.88 which means the company heavily relies on borrowed funds to run its business.

Peers of the Company

India’s alcoholic beverage market is dominated by strong players in segments such as IMFL, beer, and wine. The company faces fierce competition in the IMFL market in India from both domestic and multinational companies. 

The below images show the PAT and the ROE of the competitors of Allied Blenders and Distillers.

Source: RHP of the company
ROE of Allied Blenders and Distillers
Source: RHP of the company

Strengths of the Company

  • The company is the largest Indian-owned IMFL company and the third-largest IMFL company in India, in terms of annual sales volumes between Fiscal 2014 and Fiscal 2022. 
  • The company has developed a well-recognized product portfolio over the years and transformed from a single-brand company to a multi-product and multi-brand company with a presence across various categories and segments of the IMFL industry in India. 
  • The company has an extensive pan-India network of bottling facilities, enabling local production at optimal costs without inter-state tariffs. This ensures timely delivery to the distribution network while complying with regulations.
  • The Indian alcoholic beverage market is growing, especially in Tier II and Tier III towns, driven by an increasing urban population, a rising middle class, and a growing economy. Thus, the company is well-positioned to capture tailwinds in the Indian IMFL industry

Weaknesses of the Company

  • The company is primarily dependent on the sale of whiskey for a major portion of its revenue. During the last three financial years, the company generated more than 95% of its revenue from the sale of whiskey. Any reduction in the sale of whiskey can adversely affect the company’s business.
  • The company operates in a highly competitive field with its top competitors being United Spirits and Pernod Richard India. An inability to compete adequately and effectively with competitors mainly in the whisky segment can have an adverse effect on the business
  • Taxes are one of the important factors influencing the prices of the company’s products. Any increase in these taxes will influence the price of whiskey, thus influencing the consumer’s alcohol consumption.
  • The prices of alcoholic beverages in India are controlled by state governments, leading to high variations in prices across states due to varying tax structures. Changes in excise policies or increased manufacturing costs could negatively impact the company’s profit margins.
  • The company holds unsecured loans that lenders may demand repayment for at any time, and it may not have enough funds to make timely or any payments.

Also read…

Allied Blenders and Distillers IPO Review – GMP

The shares of Allied Blenders and Distillers Limited traded at a premium of 21.71% in the grey market on June 21, 2024. The shares tarded at Rs.342. This gives it a premium of Rs 61 per share over the cap price of Rs 281. 

Allied Blenders and Distillers IPO Review – Key IPO Information

ParticularsDetails
IPO Size₹1,500.00 Cr
Fresh Issue₹1,000.00 Cr
Offer for Sale (OFS)₹500.00 Cr)
Opening dateJune 25, 2024
Closing dateJune 27, 2024
Face Value₹2 per share
Price Band₹267 to ₹281 per share
Lot Size53 Shares
Minimum Lot Size1
Maximum Lot Size13 (689 shares)
Listing DateJuly 2, 2024

Promoters: Kishore Rajaram Chhabria, Bina Kishore Chhabria, Resham Chhabria Jeetendra Hemdev, Bina Chhabria Enterprises Private Limited, Bkc Enterprises Private Limited, Oriental Radios Private Limited And Officer’s Choice Spirits Private Limited 

Book Running Lead Manager: ICICI Securities Limited, Nuvama Wealth Management Limited (formerly known as Edelweiss Securities Limited), ITI Capital Limited.

Registrar to the Offer: Link Intime India Private Limited

The Objective of the Issue

The net proceeds received from the offer for sale will be utilised for the following purposes:

  1. Prepayment or scheduled repayment of a portion of certain outstanding borrowings availed by the Company
  2. General corporate purposes.

Conclusion

In this article, we looked at the details of Allied Blenders and Distillers IPO Review 2024. While the company boasts a strong market position as the largest Indian-owned IMFL company with an extensive product portfolio and distribution network, it faces challenges such as thin profit margins, high dependence on whiskey sales, and vulnerability to regulatory changes. 

What do think the future holds for the company? Are you applying for the IPO? Let us know in the comments below.

Written by Aaron Vas

By utilizing the stock screenerstock heatmapportfolio backtesting, and stock compare tool on the Trade Brains portal, investors gain access to comprehensive tools that enable them to identify the best stocks, also get updated with stock market news, and make well-informed investments.


Start Your Stock Market Journey Today!

Want to learn Stock Market trading and Investing? Make sure to check out exclusive Stock Market courses by FinGrad, the learning initiative by Trade Brains. You can enroll in FREE courses and webinars available on FinGrad today and get ahead in your trading career. Join now!!