Globus Spirits Limited Q2 FY23 Earnings Conference Call Insights

Key highlights from Globus Spirits Limited (GLOBUSSPR) Q2 FY23 Earnings Concall

Q&A Highlights:

• [00:19:03] Abneesh Roy from Nuvama asked if inflation in glass in 2H23, that’s used in the premium side of the portfolio, will continue. Shekhar Swarup Joint MD replied that in 2H23 there will be further inflation in glass prices. However, GLOBUSSPR has budgeted for a lot of this increase so it’s still quite comfortable on the actual cost of production vs. budgeted.

• [00:26:25] Prithvi Raj from Unifi Capital asked about the breakup of other expenses. Nilanjan Sarkar CFO answered that mainly 52-55% of the other expense is in power and fuel. And the other breakup of other expenses includes, freight expenses, IMFL above the line topline marketing expenses, and other expenses relating to bottling.

• [00:28:22] Nitin Awasthi from InCred enquired if the company has brands in the IMFL segment in the regular and the others category. Shekhar Swarup Joint MD clarified that the company doesn’t have any brands in IMFL which does not fall into Prestige and above category.

• [00:44:37] Tarang Agrawal from Old Bridge enquired that if the rice husk price is benchmark to the extent of coal prices. Shekhar Swarup Joint MD answered that there is no formal benchmarking. GLOBUSSPR sees power plants or rather Industries shifting between rice husk and coal and as a result an equilibrium gets maintained.

• [00:45:58] Kshitij Saraf from Tusk Investments asked about the guidance in terms of operating margin over the next two quarters and FY24. Shekhar Swarup Joint MD said that the company is expecting to see margins being north of 15% in the coming quarters, but does not expect them to come to the same levels as last year.

• [00:52:52] Rushabh Doshi from Nirmiti Investment asked that in the next 1-2 quarters, what does the company expects to happen with the consumer volumes. Paramjit Gill CEO said that in Haryana, the company is seeing recovery. In Rajasthan, there’s temporary blip. However, GLOBUSSPR believes in the next couple of quarters it will all be inching up significantly.

• [00:54:23] Hitesh Sharma from Whitesky asked if there is any plans to add natural gas as a fuel since the company’s bill for fuels is extremely high. Paramjit Gill CEO clarified that natural gas is more costly fuel vs. coal and rice husk. Also the capex required to become biogas enabled is high.

• [00:58:24] Sneha Jain from SKS Capital enquired about the growth the company is seeing going forward. Shekhar Swarup Joint MD replied that gradually the company expects to come back to 16-18% kind of margin levels. GLOBUSSPR has also begun to see softening in costs which should take margins back to the levels that all want.

• [01:01:33] Prithvi Raj from Unifi Capital enquired when the company will come to the new tax regime on the income tax rate.  Shekhar Swarup Joint MD said it was expected to come from FY23. However, with the reduction in PBT, it makes more sense to utilize the balance MAT credit and take advantage of accelerated depreciation available for FY23. So from FY24 new regime is expected.