Brewing gains: Alcohol as well as cigarette stocks on a high

  • Alcohol stocks like Radico Khaitan and United Spirits have also gained as events and weddings are expected to aid a spike in consumption

It’s a good time to be in the business of alcohol. Most stocks in the business have given positive returns to investors — a few of them by over 50% in the last one year – and the outlook for these industries is bright too, according to analysts.

Booze stocks on a high

Stocks of alcohol companies have also been picking up pace in the last one year. Although United Breweries gave paltry returns — the rest have risen between 15-51%, including the recently listed Sula Vineyards, whose stock has run up 38.6% since its debut on the bourses.

The sector is all set for good growth, according to analysts. The Indian whisky market, valued at $14.9 billion in FY20, is projected to touch $22.4 billion by FY25 on the back of demographic trends, new customers and premiumisation, said a research report by Nuvama.

“The market is set to drive value growth with strong premiumisation trends leading to up-trading within the category as well as an increasing preference for high-value products across price segments,” the research report said.

“Events and marriages are back to pre-Covid levels and shall drive a spike in alcohol consumption. This could negate the urban slowdown,” the report said. However, three of the listed players — Radico Khaitan, United Breweries and United Spirits have been stressed by margin worries because of high input costs.

Apart from steady growth in demand, stocks in the sin category are also gaining from a clutch of other favourable market factors, which bodes well for these businesses.

“Liquor industry finally saw some green shoots in margins after tepid three quarters. We expect long-term growth momentum to sustain even as near-term stress on margins persists. The worst is likely behind,” said Nuvama.

An IPL match without a glass of beer or whiskey was inevitable…Dont believe me ?? Check out this chart on $UBL.NSE Stock has been taking support at 200 WEEKS average at 1400 and is about to breakout above 50 weeks average at 1520. Looking at the internal crossover of momentum indicator, it seems stock is ready for a rocket launching move which could be backed with some good quarterly result after summer break and IPL. Go long with Sl at 1400

— (@Kushghodasara) June 14, 2023

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