Liquor Stocks React Sharply as Maharashtra Hikes Excise Duty on IMFL

Market Performance

Liquor stocks experienced a sharp divide in trading on Wednesday, June 11, following the Maharashtra government's announcement of an excise duty hike.

• Top Losers:
  • Allied Blenders & Distillers, United Spirits, Radico Khaitan, and Tilaknagar Industries fell up to 5%.
• Top Gainers:
  • GM Breweries surged 18%, Sula Vineyards rose 11.3%, and Som Distilleries & Breweries gained 4%.

Key Policy Changes

The Maharashtra cabinet approved a significant revision in excise policy, marking the first update since 2011. Key changes include:

• Excise Duty Hike:
  • IMFL: Increased from 3x to 4.5x the manufacturing cost (up to ₹260 per bulk liter).
  • Country Liquor: Raised from ₹180 to ₹205 per proof liter.
• New Liquor Category:
  • Introduction of Maharashtra Made Liquor (MML), exclusively for local manufacturers.
• Revised Retail Prices (180 ml bottle):
  • Country Liquor: ₹80
  • MML: ₹148
  • IMFL: ₹205
  • Premium Foreign Liquor: ₹360

The move is expected to boost the state's excise revenue by ₹14,000 Crore annually.

Why Some Stocks Gained While Others Fell?

• Bearish Sentiment on IMFL Makers:
  • Companies like Allied Blenders & Distillers, United Spirits, and Radico Khaitan faced selling pressure due to higher production costs.
• Beer & Wine Stocks Rally:
  • Investors anticipate a shift in consumer preference towards beer and wine, which is expected to benefit companies such as GM Breweries, Sula Vineyards, and Som Distilleries.

Company Highlights

GM Breweries

• Primarily focuses on country liquor, contributing 25-30% of Maharashtra's excise duty in this segment.
• The stock surged 18% on expectations of higher demand.

Sula Vineyards

• Strong presence in Maharashtra with two vineyard resorts in Nashik.
• Shares jumped 11.3% as wine demand is expected to rise amid higher IMFL prices.

Summary

Maharashtra's excise duty hike has triggered a mixed reaction in liquor stocks. While IMFL producers face cost pressures, beer and wine companies gain as consumers may opt for cheaper alternatives. The policy shift aims to boost state revenue by ₹14,000 Crore, reshaping the dynamics of the liquor industry.