Associated Alcohols & Breweries Ltd Q4 FY25 Earnings Analysis

- Proprietary IMFL brand sales expected to constitute around 50%-60% of top-line over the long term. - New premium products (Nicobar gin and Hillfort whiskey) showing steady growth; volumes currently ~3,000 cases, expected to scale fast. - Expansion into large states like UP, Maharashtra, and Goa underway, with market-share gains anticipated, especially in Kerala and similar markets. - Ethanol plant running at optimum capacity; revenues around INR68-70 crores expected to sustain. - Contract manufacturing business growing substantially, with projected revenue exceeding INR1,200 crores by FY '26. - RTD and tequila segments expected to grow quickly with RTD forecasted market growth of 17%-20% and tequila 30%-40%. - Country liquor business (IMIL) expected to grow only at industry pace due to tender constraints; market stable around INR120-130 crores. - Overall revenue growth supported by premiumization, market expansion, and operational efficiency.

- IMFL proprietary brand volume is expected to grow sustainably at 12%-15%, supporting revenue growth. - IMIL (Indian Made Indian Liquor) is expected to remain stable, growing in line with industry/tender volumes. - Ethanol segment currently running at full capacity with revenues around INR68-70 crores; revenue expected to sustain. - Margin improvement guided to reach 13%-15% over next 1-2 years, driven by premiumization and operational efficiencies. - Premium products (e.g., Nicobar gin, Hillfort whiskey) expected to increase contribution to 50%-60% of topline in longer term, aiding margin expansion. - Marketing spend to increase moderately (from current 3%-5% to possibly 5%-7%) to support brand building for new premium launches. - Capex for FY25 and FY26 around INR100 crores each, funding expansions including malt plant (6,000 liters/day capacity). - Overall, management targets revenue growth beyond INR1,200 crores by FY26 and sustainable margin expansion through premiumization and operational excellence.

- Capex of around INR 100 crores planned each for FY '25 and FY '26, funded through internal accruals and preferential allotment. - New state-of-the-art bottling hall established with 10 automated lines, involving approximately INR 50 crores capex, primarily for contract manufacturing growth. - Malt plant expected to start production in April with a capacity of 6,000 liters per day. - Ongoing investment in a single malt plant aligns with long-term vision for premium, high-quality products. - Additional bottling lines installed, now a total of 41 lines, enhancing capacity for proprietary and licensed IMFL products. - Strategic investment focused on premiumization, operational excellence, and geographic expansion.

- For FY '25 and '26, the company plans a capital expenditure (capex) of around INR 100 crores each year. - This capex will mainly be financed through internal accruals and the preferential money already raised. - There is no explicit mention of any new fundraising through debt or equity beyond the preferential funding already secured. - Hence, no immediate or future new fundraising plans via additional debt or equity have been indicated.

- The company operates on a yearly tender basis for supplying Country Liquor (IMIL) in specific districts. - They are the sole supplier in those districts and supply volumes as per tender wins. - The IMIL segment is expected to stabilize and grow only at the pace of the tender volumes in those districts. - For ethanol, the company has secured tenders from OMCs with an allocation of 29,724 kiloliters for the supply year 2024-25. - The ethanol plant is running at optimum capacity currently, indicating full utilization of current orders. - There is mention of government planning to release new tenders for ethanol supply, but details and clarity on allocation remain uncertain. - No explicit mention of an order backlog or pending orders beyond current annual tenders and ethanol supply agreements.