Hey guys,
Resuming the thread on this stock. In the most recent annual report, it looks like the sugar business enjoyed 4x growth while thealcoholbusiness experienced a 20% de-growth. Is anyone still tracking the company and know what’s going on here?
http://www.bseindia.com/xml-data/corpfiling/AttachHis/Piccadily_Agro_Industries_Ltd_290513_Rst.pdf
Cheers,
-Prasanna
Hi,
Yeah, the co had a poor last year as the prices of country liquor are state controlled and as per some industry people, it was not revised and players were under pressure. As per recent announcement by co, the prices have been revised and co expects a good year ahead.
Ayush
The company had a phenomenal last quarter. EPS is up 70% yoy. But more importantly the liquor division did very well - 12% sales increase yoy, with a 135% net profit increase. The stock appears highly undervalued if the growth rates are to continue.
@Ayush: Do you have any further insights here? A few queries from my side:
)- The margins on the liquor business seems to have improved to 17% (up from 8%); This was probably due to pricing improvements that you had mentioned earlier. Is this sustainable in the near future? Is there possibility of upward improvements?
)- The revenue growth has been quite modest. Once margins stabilize (around 17-20%?) are there any triggers in place that can improve revenue growth in this story?
)- I know you (and other senior valuepickrs / ben graham himself) advocate the idea that the market is usually right over the long term – 2-3 years. This one seems to be punished for a long time. Is there something I’m missing / recently changed? The liquor segment overtaking profits seems to be 2 years old?
Thanks,
-Prasanna
Hi Prasanna,
The positives you have highlighted. The negatives are -
1). The co also has a sugar division which is unpredictable and can churn out losses (like it happened in Q2FY14)
2). The promoters are politically linked and hence there is always a question mark on the ethics and taking care of minority
3). One of the family member was the guy behind the Jessica Lal murder case.
Regards,
Ayush
Disc: I’m invested.
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PIAL recently acquired wine brands from a reputed company. PIAL has taken all steps in right direction… I.e. Sugar > Country Liquor > IMFL / established Wine brands. Acquiring established Wine brands seems to be a better step than creating IMFL brands from scratch.
Sugar to Liquor categorization and related re-rating has not happened as yet, but looks like that should take place very soon.
Valuations ran up after acquisition, but expecting to come down to Rs 26-28, at which point I would plan to buy.
Any views from regulars on this thread?
Yes, the direction is very interesting…lets see how things unfold over next few years.
Ayush
Hi. I have tried looking into the company’s recent acquisition ofnirvana biosys. There is no further information available than the fact that it has bought over 89% of the company and the said co. is now a subsidiary. There are no numbers disclosed.
I am new to analyzing companies… so please bear with me.
my question is that - is it ethical for a company to be this discreet about its business deals? How can we as minority shareholders gauge whether the deal is a fair one or overvalued without any data? On what basis can I hang my valuation of the management’s capabilities for making investments - they could squander profits for all I know…
I recently bought @40, after comparing size and prospects of it’s acquired Luca wines, in light of recent acquisition of Sula wines by Reliance (Anil A).
Mr Kartikeya Sharma today resigned from board. As per ARs, he was the only ‘Promoter Director’. Kartikeya was the one who transformed Piccadily into what it is today. I see this event a big -ve… waiting to hear from mgmt as to who will replace him.
option-1) exit now and re-enter after things become clear?
option-2) bet on horse, not jockey, i.e. continue holding and expect current mgmt to deliver.
Rajul,
Exit of Sharma can be positive too. Investors will start thinking change of mgt can create value and risk profile is low. (no more Sharma in promotors, vanishing memory of past event)
Kunal,
I don’t believe that promoters will change as such. Kartikeya has many, mainly media businesses to deal with.
So either
1- he may want to focus on other businesses, or
2- Some dispute with other promoters.
Stock tanked on this news, ‘should have’ exited 
Stock is expected to consolidate and be range bound for next few months.
I prefer buy on dips and hold strategy for such stocks.
Kunal
Now that we have change of Management structure and rise of Sugar sector, what are the prospects of this company in coming months?
Disc : invested in few shares yesterday.
I came across a couple of articles that indicates that they have launched a very well appreciated premium whiskey last year …
Indri-Trini Is The Single Malt Of A Whisky Lover’s Dreams | Traveldine
The site is very nice as well…
Indri Single Malt: Award Winning Whisky from Northern Distilleries India (piccadily.com)
Apparently they have 12000 liters/day capacity and planning to expand storage capacity as well…
"We are currently in the process of expanding our warehousing and coopering operations. We are adding 12 new warehouses and 60,000 barrels in total. This will bring our total capacity to 1,00,000 barrels.
"
It appears that they also have co-produced another brand named “Kamet” …
Whiskeyfellow: Kamet Indian Single Malt Whisky Review & Tasting Notes
Their 2021 AR also mentions both Indri and Kamet .
To me it looks like that they have taken a few good steps towards this premiumization effort and if the accolades translate to sales, things might become interesting.
Anyone still tracking this company or can anyone provide any insight into the popularity of the brand in Goa\Delhi area ? It was launched in Mumbai as well but its been only a few months .
Disc: Interested… looking for information.
Comparing AR’s of 22 and 21 it seems they are progressing well with their whiskies.
They sold 1511 cases of Indri( 19 only in previous year),2646 cases of Kamet(1250 previous year)14103 cases of whistler(9179).
The new AR also says that sugar produced and recovery ratio was lower this year but Sales overall increased from 224 crores to 276 crores.
So seems the whiskies are doing the lifting .
Indri has won 8 awards since March 22 and they have 40000 barrel stock and planning to add 30K more.
Indri came second in this one recently…
Does anyone have any estimate how profitable this can become if it becomes as successful as Rampur,Amrut or Paul John ? I have no clue myself .
Disc . Invested 2% of portfolio
Update: Indri has entered US market as well …
From the link,this part sounds rum 
“The distillery is rapidly expanding its warehousing capacity to hold another 30,000 barrels. A new visitor center is also under construction and will be open for visitors by the end of the year. The distillery will also soon launch India’s first pure cane Juice Rum matured for 12 long years in its tropical climate.”
at present CSD army canteen single malt is easily available specially brand like amrut and paul john but not kamet & indri, hope this scuttlebutt helpful. tracking this company recently
disc no position
Thanks for checking . I assume they are not widely available yet … did not see the bottles in local Spencers in Kolkata either. There were some articles in the web when they launched in Mumbai,April 2022 and those mentioned that it was only available in Goa and Noida before that.
However,found Indri trini mentioned in a Forbes article…
They are coming up with a new facality in Chattisgarh and are expanding their Karnal facility. This would more than double their distiillary capacity.
However, at present there’s no information as to when the new facilities shall commission.
Has anyone tried contacting the company yet?
In market, Indri is priced at Rs 5100. Any idea what the EDP ( Ex-distilliary price) could be?
And what could be the possible margin range of IMFL scotch?
Last quarters results showed significant revenue growth in the non sugar or liquor segment .I also spotted a bottle of Indri-trini at the nearby Spencers in Kolkata outskirts .It was selling at Rs. 3940 . Looks like things have started moving now.
Result is out, decent show.
I did some scuttlebutt in Bangalore, called 4-5 big liquor stores and found that Indri single malt was availabe everywhere, I bought one for around Rs.3800 a moonth ago. I was surprised to know from the counter person that its selling better than Amrut.
Anothing thing I noticed about customer base of premium products. Both Amrut and Indri was out of stock in a shop, one customer came for Amrut and added his name in the waiting list, he never tried Indri before, I told him its good and he just casually added one Indri bottle also, without thinking twice.
In another news their newly introduced Rum was received well among the critics. Not a bad show from a new entrant in the liquour making. Though its a very limited addition product.
April 2023, New Delhi: Piccadily Distilleries is proud to announce the first ever ‘Gold Medal’ to be won by an Indian rum at the prestigious IWSC Awards 2023, recently announced in London, for their newly launched rum – Camikara. It has been awarded the gold medal in the 11- to 15-year-old category, with a stunning 95 points.
Positives:
Opportunity size is huge and they are tiny fish in a big bowl, doing the right thing and porducing top class products from scratch.
Single malt and premium liquors are an aspirational products similar to luxury cars, watches and other products and there is huge upside, specially when per capita GDP of India grows from $2700 to $5000 in this decade.
They are largest producer of quality single malt in India and supplier to other brands also, this is an additional advantage of being backward integrated and not dependent on ouside suppliers.
As they are driving towards premium products and if they succedd to get most of their profit form this segment, in the long run they could be treated and re rated from sugar to premium consumer company unlocking the full potential.
Risks:
Biggest risk for the company is volatile goverment policies, just now Karnatak govt. added 20% additinal surcharge for IMFL, so the price of Indri and other IMFL has increaed by around Rs. 500 in Bangalore.
Another risk is the FTC with UK\Britain which could reduce the import duty for premium scotch significantly from 150% to 100% and adversly affect the overall IMFL market.
Its micro cap and not much information available publicly. Hard to judge the corporate governence etc. , given they have subsidiers and associate companies like “Piccadily Sugar & Allied Industries Limited” and “Piccadily Hotels Private Limited”.
Stock has run up recently in the anticipation, valuation is anyone’s call.
