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Globus Spirits Ltd Posted By : John1234
Posted On : Sunday, November 30, 2014
Company Name : Globus Spirits Ltd Investment Range : Long
Ticker : NSE:GLOBUSSPR M.Cap.Range : Small-cap
Country : India Stock Price : 71.70
Description :        

Globus Spirits Ltd (NSE:GLOBUSSPR)

Business Description

Globus Spirits Limited (GSL) is engaged in manufacturing, marketing and sale of Indian Made Foreign Liquor (IMFL), India Made Indian Liquor (IMIL) and bulk alcohol. As of March 31, 2012, the Company had a combined installed capacity of 84.4 million liters per annum. Its brands include French Castle, County Club, Hannibal Legendary and White Lace. GSL’s Indian made Indian liquor consists of Nimboo, Narangi, Ghoomar and Heer Ranjha. The Company operates three distillers in India.

Revenue Breakup

The company’s business comprises of Manufacturing & Consumer businesses. The manufacturing business revenues, comprising (a) bulk alcohol manufacturing and (b) franchisee IMFL. The consumer business comprising (a) Indian Made Indian Liquor and (b) Indian Made Foreign Liquor. In the fiscal 2014, the total revenue was about INR 4,960 mm out of which 54% revenue was generated from consumer business segment and 46% was contributed by manufacturing business.

Positives

  • Cheap valuations with P/B of 0.47 and P/S of 0.41mm
  • Hannibal Rum brand approved for CSD, sales commenced in FY 2014
  • Strong growth in IMFL franchisee with 33% volume CAGR during FY10 to FY14 to reach 2.4mn cases
  • Bulk alcohol growth of 37% volume CAGR during FY10 to FY14
  • Improved revenues during the recent quarters with revenues improved from INR 1,197 mm during Sep 13 to INR 1,364 mm in Sep 14

Negatives

  • Decline in revenues and profits. With sales declined from INR 5,574 mm in FY 2012 to INR 4,965 mm in FY2014 while net profits dropped from INR 408.9 mm to INR 45.8 mm for the same period
  • Total debt increased from INR 821 mm in FY13 to INR 895 mm in FY14
  • Company hasn’t given dividend for the current fiscal year
  • Company is generating enough free cash
  • Govrnment statutory might dampen the sales

Key takeaway

As the valuations seem to be cheap, the company has good investment returns potential if it can streamline its operations and improve its fundamentals. 

 
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