Release Date: November 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Som Distilleries & Breweries Ltd (BOM:507514, Financial) reported a 17.3% year-over-year growth in consolidated income, reaching INR291 crores.
- The company achieved an EBITDA of INR35.2 crores, marking a 28% increase year-on-year, with an EBITDA margin of 12.1%.
- Net profit increased by 10% to INR16.4 crores, demonstrating resilience in navigating seasonal challenges.
- The company reduced its gross debt by INR30 crores and net debt by INR35 crores, improving its financial position and lowering the debt-equity ratio from 0.29x to 0.23x.
- Som Distilleries & Breweries Ltd (BOM:507514) received a credit rating upgrade from BBB+ to A-, indicating improved financial strength and prudent risk management.
Negative Points
- Sales were impacted by non-functioning excise portals in Delhi and Rajasthan for about a fortnight.
- The second quarter was typically subdued due to the monsoon and festivals, hindering consumption.
- There was a slight decline in beer volumes for Q2 FY25 compared to Q2 FY24, attributed to seasonality and price increases.
- The company faces potential risks from raw material price fluctuations, particularly sugar and glass bottles, despite current stability.
- The company does not disclose brand-wise margins, limiting transparency in profitability analysis for individual products.
Q & A Highlights
Q: Is the newly launched Legend beer available in all markets where Som Distilleries operates, or is it limited to specific regions?
A: Legend has been launched in select markets, specifically in Pondicherry, Kerala, and Karnataka. It is a Southern-based brand that is gaining traction in these areas. - Deepak Arora, CEO
Q: What is the outlook on raw material costs, particularly sugar and glass bottles, and can you provide brand-wise margins for your beer products?
A: Raw material and bottle prices remain stable, with new glass manufacturing units opening to meet demand. Sugar prices are cyclical but expected to stabilize. We do not disclose brand-wise margins, only consolidated figures. - Deepak Arora, CEO
Q: Can you provide insights into Som Distilleries' growth strategy and future prospects?
A: We are experiencing significant growth, driven by consumer acceptance and strategic expansion into new markets. The industry is growing at a CAGR of 9%, while we are growing at 29%. We plan to maintain this growth through product visibility and new offerings. - Deepak Arora, CEO
Q: Is there enough land for capacity expansion at the Hassan plant, and what is the status of the recent CapEx?
A: The Hassan plant was designed with future expansion in mind, and there is space for capacity increases. We plan to capitalize 90% of the recent CapEx by the end of the financial year. - Deepak Arora, CEO and Nakul Sethi, Executive Director
Q: What are the plans for expansion in the southern markets, and how is the revenue distribution across states?
A: While our units are in specific states, we operate in 18 states across India. Revenue from Madhya Pradesh has decreased from 70% to 40-45%, and we aim to further diversify our revenue sources by setting up units in new states. - Deepak Arora, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
