Shares of Globus Spirits Limited, a small-cap alcohol manufacturer, surged 20% during Monday’s trading session, hitting Rs. 954.05 on the BSE.
Stock Performance
At around 3:00 p.m., the stock was still up by approximately 19.2%, trading at Rs. 947.8, compared to its previous closing price of Rs. 795.05. Globus Spirits has seen a positive return of 17.3% over the past year, 13.7% over the last six months, and 7.7% in the past month.
What’s Driving the Surge?
The stock’s jump follows an announcement from the Ministry of Consumer Affairs, Food & Public Distribution, which lowered the price of rice for ethanol producers. The price was reduced from Rs. 28 per kg to Rs. 22.5 per kg, effective from January 17, 2025. This move is aimed at boosting ethanol production, and it will likely reduce the cost of raw materials for companies like Globus Spirits, which produce certain spirits using rice or its by-products.
Key Details of the Price Cut
The government has also allowed ethanol producers to purchase up to 24 lakh tonnes of rice at this reduced price until June 30, 2025. This price reduction should help distilleries improve their cost efficiency. Furthermore, the government’s directive encourages the use of Food Corporation of India (FCI) rice in ethanol production, particularly older stock.
Financial Performance
Globus Spirits reported a 12.5% growth in revenue from Rs. 567.2 crore in Q2 FY25, up from Rs. 638 crore in Q2 FY24. However, the company’s net profit took a hit, dropping 88% from Rs. 131 crore to Rs. 16 crore during the same period. EBITDA also saw a decline, falling 21.5% from Rs. 41 crore in Q2 FY24 to Rs. 32.3 crore in Q3 FY25.
About the Company
Globus Spirits Limited is a leading manufacturer of Indian Made Indian Liquor (IMIL), Indian Made Foreign Liquor (IMFL), bulk alcohol, hand sanitizers, and also engages in franchise bottling.
Disclaimer
The views and investment advice shared in this article are those of the experts cited and not of Trade Brains. Investors should always do their own research and consult an advisor before making any investment decisions.
