Liquor stocks surge even as Sensex, Nifty tank; check top gainers

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Published: May 4, 2020 12:46:40 PM

With local wine shops allowed to open across states from today, liquor stocks are back in focus on Dalal Street today. Breweries and distilleries were seen moving up in the share markets while the benchmark indices fell over 5% each.

More important, there is the fear that crowding at the liquor shops will defeat social distancing. (Representative image)The demand to open liquor shops has been made repeatedly by state governments, hoping to revive their coffers that are largely helped by the tax collected from liquor sales.

With local wine shops allowed to open across states from today, liquor stocks are back in focus on Dalal Street today. Breweries and distilleries were seen moving up in the share markets while the benchmark indices fell over 5% each. 12 of the 15 liquor stocks on Sensex were trading in the green on Monday morning. After having shut doors since March 23, standalone wine shops in red, orange, and green areas were allowed to open with certain riders. The demand to open liquor shops has been made repeatedly by state governments, hoping to revive their coffers that are largely helped by the tax collected from liquor sales.

Associated Alcohols & Breweries Ltd was the biggest gainer on Sensex among other liquor stocks, up 10.68% to trade at Rs 188 per share. GM Breweries was the close second gaining 9.22% on Monday morning to trade at Rs 408 apiece. Globus Spirits registered a 5% jump, while Radico Khaitan shares surged 4.63%. United Breweries gained 2.54% to trade at Rs 962 per share. United Spirits, Tilaknagar Industries, and Pioneer Distilleries were trading in the red, down over 0.50% each. 

In an earning preview of the sector, brokerage firms had predicted a fall in revenues as demand slumped in the last days of the January-March quarter. Emkay Global expects Radico Khaitan and United Spirits to perform better in the March quarter. HDFC Securities, on the other hand, has a weak outlook mapped for United Spirits and expects Radico Khaitan’s performance to be better. “We model 12% revenue growth led by 15/13/2% growth in P&A/Regular/Non-IMFL. We expect 10% volume growth (12% P&A and 9% Popular) despite moderation in industry growth as the co continues to gain share and scale its new launches,” HDFC Securities said on Radic Khaitan.

While liquor shops have opened for now the inventory might not be deep enough to cater to the needs of the people. Pipelines were dried when distilleries were shut for a month, restoring the supply could take as mong as three to six weeks, Deepak Roy, Chairman – Confederation of Indian Alcoholic Beverage Companies told The Economic Times. The current stock of alcoholic products is expected to last until the replenishment arrives at wine shops.

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