Investors in the stock of GM Breweries have been rewarded for their patience. The price movement over the last month has also excited short term investors.
After the post covid rally that ended in October 2021, the stock languished for about two and a half years. Then came a brief spike in 2024 only to be followed by one year of disappointment.
But the situation has changed drastically. In the last one month, the stock is up a stunning 77.5%. This was largely due to the company’s strong quarterly results.
The sharp up move has caught the attention of investors and traders alike.
GM Breweries share price – 1 year
So, should investors consider the stock now?
In this editorial, we will discuss the pros and cons of investing in the stock of GM Breweries.
Read on…
Pros
#1 Decent fundamentals
GM Breweries has grown its revenue at a compounded annual growth rate (CAGR) of 9.9%, and 11.2% over the last 5 and 3 years, respectively.
It’s net profit has grown at a CAGR 13.7%, and 11.4%, over the last 5, and 3 years, respectively.
While sales and profit growth have been decent, the company’s balance sheet has remained strong.
The return on equity (ROE) has averaged 15.7%, and 15.6% over the last 5 and 3 years, respectively. The return on capital employed (ROCE) has been better averaging 19.7% and 19.5% respectively over these time periods.
GM Breweries has achieved these return ratios with no debt. The debt to equity ratio has been zero for a few years now.
GM Breweries financial snapshot (FY22-25)
| FY22 | FY23 | FY24 | FY25 | |
| Sales growth | 62.4% | 28.2% | 3.5% | 3.6% |
| Net profit growth | 11.7% | 7.0% | 51.7% | -14.9% |
| Return on Equity | 15.8% | 14.6% | 18.4% | 13.7% |
| Return on Capital Employed | 20.0% | 19.3% | 22.1% | 17.1% |
The company cash flows are also strong. The operating cash flow has increased from Rs 975 million (m) in FY22 to Rs 1,617 m in FY25. The debtor days have also been under control in a range of around 20-30 days over the last few years.
The cash has been returned to shareholders via dividends. In FY25 the company paid a dividend of Rs 7.5 per share with a payout ratio of 13.3%. The average payout ratio for the last 5 years is 10.3%.
The promoter holding (74.43%) is strong at nearly the maximum regulatory level of 75%. Foreign portfolio investors have also marginally hiked their stake in the company in the June 2025 quarter.
#2 Good industry position
GM Breweries is single largest manufacturer of country liquor in Maharashtra with a sizable market share. The company has a monopoly in country liquor in the districts of Mumbai, Thane and Palghar.
It contributes about 25-30% of the total excise duty for country liquor in the whole of Maharashtra.
Country liquor (also called Indian Made Liquor or IML) is a significant segment due to its affordability and strong demand in rural and semi-urban areas, expanding middle-class incomes, and urbanisation.
In the last few years, the company has concentrated on country liquor to capture the growing demand in rural areas. There is strong growth potential in tier 2 and tier 3 cities where demand for affordable liquor is rising.
The company has a fully automatic plant at Thane, Maharashtra with a capacity to produce about 50,000 cases a day from 200 cases a day at the start.
GM Breweries owns and distributes its liquor under the brands such as G.M. Santra, G.M. Doctor, G.M. Limbu Punch, and G.M. Black.
The company benefits from sustained growth, disciplined financial management, and expansion plans focused on modernisation and increasing capacity.
Cons
#1 Regulations and taxes
The company operates in a highly regulated environment.
Alcohol is a sector that the government (both state and central) have tightly controlled for decades.
While this does help established players in terms of limiting competition to an extent, it can also be a damper on the financial side.
A recent example is the Maharashtra government hiking the excise duty on IMFL by 50%. This actually benefited the company indirectly because it produces beer and country liquor. The tax hike hurt its competitors.
But it goes to show that the industry is, to a large extent, at the mercy of the government. Any excise hike on the company’s products will negatively impact revenues and thus, the net profit.
About GM Breweries
GM Breweries, set up in 1981, is a Mumbai-based company. It specialises in manufacturing and marketing alcoholic beverages, primarily Country Liquor (CL) and Indian Made Foreign Liquor (IMFL).
The company is the largest manufacturer of country liquor in Maharashtra, holding a significant market share with a strong and loyal customer base.
It pioneered innovations such as introducing 180 ml and PET bottles in the country liquor segment, making its products affordable and convenient for consumers.
Investors should evaluate the company’s fundamentals, corporate governance, and valuations of the stock as key factors when conducting due diligence before making investment decisions.
Happy investing.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here…
The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.