Stock market today: On account of strong Q2 FY2021-22 numbers after tax sops announced by some state governments and grain prices remaining same, liquor stocks are rising today as market has gone bullish over such stocks expecting reduction in debt of liquor companies. Liquor major Radico Khaitan share price shot up around 4 per cent, United Spirits shares went up over 3 per cent while Globus Spirits stocks surged near 4 per cent in the intraday trade session.
According to experts, event discount is also playing its role as premium brands sale of various liquor companies have also gone up due to fast approaching festival season and recent Covid-19 restrictions. They said that one can buy stocks like United Breweries, United Spirits or McDowell and Radico Khaitan for short to medium term time-horizon.
Speaking on the major reasons for skyrocketing liquor stocks; Avinash Gorakshkar, Head of Research at Profitmart securities said, “Liquor stocks are rising due to the recent tax sops announced by some state governments including Uttar Pradesh — largest consumer of liquor in India. Apart from this, various liquor companies are reporting rise in their premium brands due to the recent Covid-19 restrictions that is expected to result in strong second quarter numbers of these companies. The market is giving some event discount to these liquor stocks as some new premium brands may hit the liquor market in fast approaching festival season.” He said that grain prices have remained more of less same so in upcoming season, liquor companies are expected to get benefit of thi8s in their grain-based products, especially beer.
Echoing with Avinash Gorakshkar’s views; Saurabh Jain, AVP — Research at SMC Global Securities said, “Market is giving event discount to all consumer durable products including liquors. In the wake of fast approaching festival season, liquor sales, especially premium brands sale, is expected to go northward. In that case, liquor manufacturing companies are expected to get better business in upcoming quarters and hence their quarterly numbers are expected to remain on the higher side in comparison to Q1 FY22 results. Since, most of the liquor companies’ Q1 numbers were strong; their next quarter result is expected to come stronger.”
Advising investors to buy liquor stocks for short-term; Sumeet Bagadia, Executive Director at Choice Broking said, “One can buy Radico Khaitan shares at current market price for the short-term target of ₹970 to ₹1000 maintaining stop loss at ₹890. One can buy United Spirits or McDowell shares at current market price for the target of ₹780 to ₹800 maintaining stop loss at ₹740 apiece.”