Key highlights from Globus Spirits Limited (GLOBUSSPR) Q1 FY23 Earnings Concall
Management Update:
- GLOBUSSPR said its Jharkhand facility is ready for operations and will be in production later in August 2022. And with this, the total installed capacity of alcohol production will increase from 23 crore liters per annum to 28 crore liters, with a capex of INR140 crore invested in Jharkhand.
- The next round of expansion in West Bengal and Jharkhand by 2 crore liters per annum each is underway and this is expected to be commissioned in the beginning of Q4 FY23.
Q&A Highlights:
- Sarath Reddy of Unifi Capital asked about the volume growth of 16% in the consumer business in 1Q23 and which geographies drove this growth. Paramjit Gill CEO Consumer said that Rajasthan is running fast and Haryana is consciously slowed down and both are driving growth.
- Sarath Reddy of Unifi Capital also asked that if the volume growth of 15-20% for FY23 and the next couple of years is sustainable. Paramjit Gill CEO said that the growth will continue to be in this range. And since the company’s business is not linear, it might bump up or down occasionally.
- Sarath Reddy of Unifi Capital enquired about the 14% EBITDA margin how it will be going forward. Paramjit Gill CEO clarified that from a long term point of view, the company is seeing its margins becoming stronger.
- Nitin Awasthi with InCred asked about the trend of ENA and power cost in 1Q23. Paramjit Gill CEO answered that the company is now tracking power cost in a rupees per gross calorific value. In 1Q23, the cost have been around INR2.5-2.7 per gross calorific value and in 2Q23, it’s seen at about INR3 so far. ENA prices have continued to rise from 1Q23 over 2Q23 by over 5-7%.
- Nitin Awasthi with InCred enquired about the logic behind the tie up in Maharashtra and financial implications of it. Paramjit Gill CEO said it is something new being done with Tilaknagar Industries. The idea is to use GLOBUSSPR capabilities of running distilleries to increase capacity utilization. And there is no capital going to be deployed by the company. GLOBUSSPR would make anywhere between INR2 and INR4 a liter as its service charge from this facility.
- Agastya Dave asked if the company is targeting up to 20% of the consumer business coming from premium segments. Paramjit Gill CEO replied that it’s a strategic target. The premium business needs to become a meaningful portion of the total consumer revenue. The internal target is 20% of the total consumer business.