Liquor stocks tumble on Supreme Court ban on highway sale; United Spirits falls 6%

By: | Published: April 3, 2017 3:06 PM

All the major liquor manufacturing firm stocks fell today due to the Supreme Court ban on the sale of liquor within 500 meters from state and national highways. The ban is immediately effective from 2 April 2017.

The largest spirits company in India United Spirits Limited promoted by Diageo Plc. a British multinational previously closed at Rs 2,174.7 tanked 6% trading at Rs 2044.95.

All the major liquor manufacturing firm stocks fell today due to the Supreme Court ban on the sale of liquor within 500 meters from state and national highways. The ban is immediately effective from 2 April 2017. The ban, which is applicable to liquor shops on the roadside of the highways and also to all the restaurants, four and five-star hotels situated in the vicinity of the highway, prompted investors to sell liquor stocks and take short positions due to which all the major shares are trading in the red.

The largest spirits company in India United Spirits, promoted by Diageo Plc, tanked 6% and was trading at Rs 2,044.95; beer manufacturing and brewing giant United Breweries was trading down 1.53% at Rs 759; the famous in-house Vodka manufacturer Radico Khaitan fell as much as 3.27% and was trading at Rs 133.3.

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Other mid-cap shares such as Globus Spirits fell 4.19% to Rs 73.2, Pincon Spirit fell 3% to Rs 63.8; Associated Alcohol and Breweries was down 5% at Rs 157.55; Dollex Industries, which was trading 3.45% higher at Rs 2.8.

On the other hand, some of the small cap liquor shares fared well, such as Tilaknagar Industries, which surged 8.39% to Rs 14.85; Winsome Breweries, which rose 2.46% to Rs 9.99, and Chambal Breweries and Distilleries, which rose 2.7% to Rs 9.5.

Liquor companies sales in the current quarter are certain to drop as the ban comes into effect, and the likely downside was reflected in these companies’ stocks.

The Supreme court ruling has put a question mark on the perpetual soar in the top line of the Alcoholic beverage industry. The industry body, the federation of Hotel and Restaurant Associations of India will discuss the issue with the ministry of tourism.

Supreme Court in its 15 December 2016 judgement had banned the sale of liquor within 500 meters from the edge of the national and state highways. State liquor associations had asked the Supreme Court to reduce the distance, a request that Supreme Court denied.

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