Multibagger Beverages Stock Shows Return Potential Of 35% In 365 Days, Buy, Says ICICI Direct

ICICI Direct has given buy rating to leading beverages stock, Globus Spirits Ltd. If you buy Globus Spirits Ltd at its current market price of Rs 741 apiece, you will get a potential return of 35%. The small cap company has a market capitalisation of Rs 2136 crore. The analyst has given a target price of Rs 1000 apiece to Globus Spirits and a time period of 12 months when the stock will reach its specified target price. Check key takeaways below:

1. Globus Spirits Stock Performance & Return

The current market price of the stock is Rs 741 apiece with 0.47% intraday decline. The 52-week high of the stock is Rs 1760 apiece and 52-week low is Rs 700 apiece, respectively. The stock has given a return of 453% in last 5-years and 439% in last 3-years.

2. Key Triggers For Future Price Performance

With doubling of the current capacity by FY24 to ~900 KLPD, GSL plans to capitalise the changing dynamics in the liquor space. Further, growing opportunities in IMIL space (better price points and growing aspirations) would lead to higher asset turnover and return ratios in the long run. Capturing premium price points in IMIL space via higher strength liquor. The government expedited 20% blending target to 2025, leading to higher diversion of ENA towards ethanol. Net debt expected to decline with return ratios reaching 30%+ levels.

3. Valuation

According to ICICI Direct, "Margins are expected to improve, going forward, led by higher rice procurement from FCI (40% in Q2), better product mix (IMIL is expected to claw its lost MS). However, higher usage of rice straw as power source and availability of coal at better prices remain key monitorables on margins front. We remain positive on the stock and maintain our BUY recommendation. We remain positive on the stock and maintain our BUY recommendation. We value the stock at Rs 1000 i.e. 11x P/E on FY24E EPS."

4. About Globus Spirits

Globus Spirits (GSL) is the largest grain-based ENA manufacturer in India with a capacity of 250 million litre. The company is also a supplier of Indian made Indian liquor (IMIL) and premium IMFL in India. Consumer segment comprised ~34% of consolidated revenues, with the rest contributed by bulk alcohol (66%). Total 80% of IMIL sales occurs in Rajasthan (32-33% market share).

Disclaimer

The stock has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.