Latest Annual report is out and its evident that the distillery business is doing well .In previous FY
They sold 1511 cases of Indri( 19 only in previous year),2646 cases of Kamet(1250 previous year)14103 cases of whistler(9179).This FY,
Indri trini production is up approximately 10x ,and Kamet 1.5 times from last year .Even whistler is up more than 3x . They also have new products like Camikara etc. and concrete plans to expand operations .
Disc. Invested from below 40 levels .
Piccadily Agro
Capacity increased from 90KLPD to 150KLPD in Sep qrtr which will be expanded further to 250KLPD by next yr (Source: Annual Report & Credit Rating Report )
And a new green field plant will come up in next 3 yr in Chattisgarh with 210KLPD capacity. (Source AR & 3yrs is my estimate but it could be much less than 3 yrs).
EIA submitted to GoI (source Google)
So the capacity is going up by 5x in 3yrs ( 3yrs is my estimate could be less than that)
Expect Distillery revenues to grow from 100cr last qtr to 500cr (i.e. 2000cr p.a.) in next 4-5yr
PAILâs EBITDA margin is ~18%, so EBITDA to touch 360cr p.a. in 4-5yr
Radicoâs EBITDA last yr was same 360cr & MCap is 16000cr
So PAIL MCap can go from ~1200cr to 16000cr in 4 yrs
(Also to be noted:
They bought a closed distillery in Portavadie UK for 1 million GBP in 2021. Distillation may have commenced in 2022 or 2023. UK govt rules state that single malt needs to be aged for a minimum of 3 years. So product from UK distillery may hit the market around 2025 - 2026. During aging a portion of the liquor is lost through evaporation, itâs called âangelâs shareâ. Angelâs share in India is very high due to climate and itâs relatively less in UK. So UK production may produce better profit margins.
Does anyone have any idea why this share is down 22% in last 5 days ? Is it profit booking or something else ?
Now you know, this Diwali :
Which whisky to drink when you have that card party !!
Which stock to buy when you want to bring goddess Laxmi to home !!
In my analysis, I focus solely on the distillery biz because that is the primary growth and valuation driver. The sugar biz will have some additional residual value but I ignore that.
So, the distillery biz has EBITDA margin of ~18%.
Just look at the segmental result which gives you EBIT.
To that, add depreciation (divide total depreciation in proportion of asset of each segment to get an estimated depreciation for segments ).
So that is how I got EBITDA
EBITDA margin would be (distillery EBITDA / distillery Revenue)
I hear some chatter about promoter familyâs one son being involved in a grave incident in the past. It has been discussed in this thread above some time back. It can indeed pose a moral dilemma for some when they are deciding to invest. But thatâs just half the picture or shall we say less than ten percent of the picture given how much water has flown under the bridge since then.
And so to make the picture complete, I will throw some light on where the family stands currently and the other son who also owns a direct stake in Piccadily Agro through his other entity called Piccadily Hotels. His name is Kartikeya Sharma.
He is Rajya Sabha MP. He defeated Ajay Maken (RGâs right-hand man) with the help of BJP to get into RS.
His father Venod Sharma is a former Congress MLA but doesnât do active politics anymore, but still wields a lot of influence in politics and local area. His mother is the Mayor of Ambala - won as an independent. He is married to the daughter of former Congress MLA & Haryana Assembly Speaker.
He is the founder of ITV media news channels which has 12 news channels including NewsX & India News along with a host of regional news channels. And Hindi & English newspapers such as Aaj Samaj, the Daily Guardian & the Sunday Guardian.
He is recipient of several awards:
Person of Year by BusinessWorld in 2022
Best CEO by eNBA in 2016
Champions of Change 2022
In a nutshell, extremely influential set of promoters who are courted by both the main political parties (you can google and find out more) and own a vast news media empire built from nothing.
(A reminder - It is also a well known fact that Mallya senior (Vittal) built his vast alcohol empire based on his political connections )
Add to that, an undeniably world-class product & brand development capability. Ask anyone - from the people who have tasted and tried Indri, to the salesman at the airport, to the sales guy at any local alcohol shop in Delhi/NCR - and you will know there is something special about Indri.
Any idea on capacity utilization across SKUs?
As per two years annual reports overall production has gone up multifold however revenue has gone up by by 40%. Below are the SKU wise numbers and corresponding revenue.
The brands you listed above are from IMFL category only. There are 3 categories for the distillery - country liquor, ethanol & malt spirit which currently account for substantial amount of biz.
But yes, its the IMFL with its own brands which is the growth engine with much higher margins. This is also a premiumization strategy - moving from bulk, high volume low margin biz to Brand centric, high margin biz. Going forward, both revenue as well as the margins should increase.
On another note, PAIL is fully backward integrated. Other listed companies do not have full backward integration and are subject to raw material problems such as ENA shortage or price spikes due to ethanol demands from Oil Marketing Companies.
PAIL is also the largest manufacturer and seller of malt spirits, a key raw material in malt whiskies, in India.
Whole rerating is due to IMFL and thatâs why focused on this category. Wanted to have a sense on incremental supply capacity and present capacity utilization to arrive at revenue for FY24.
Capacity has been increased from 90KLPD to 150KLPD in the last couple of months.
And will be increased further to 250KLPD by next year.
Plus, another 210KLPD plant in Chattisgarh to come up in next 3 yrs (EIA already submitted to GoI)
So capacity going 5x in 3-4 yrsâŚthat is big !
Check my post above for capacity additions over the next 3-4 yrs.
YesâŚlarger picture is visible. What I am trying to understand is that since these whiskeys take 3 years to come up with final product and if company currently is at full capacity utilisation then financials may start reflecting meaningful growth after 2-3 yearsâŚ.
In above table if we look at production across all SKUs have gone up substantially and if thatâs not all sold then it ideally should be sitting in inventory. itâs not very clear in annual report that how many cases are sold to generate revenue.
Disclaimer: I have position in stock from much lower levels.
Thanks @anon for such an informative piece. The only missing puzzle is the time it takes to make whiskey. Can the production catchup with the demand considering it takes 1-3 yrs to make whiskey.?
Indian Single Malt maturation period is 3 yrs in casks.
Piccadily has 50,000+ casks (or barrels) for maturation.
Each cask produces about 200L or about 230-240 750ml bottle.
Implying a capacity of about 40 lac Indri bottles per year in theory.
Indri retail price is Rs 3700 in Delhi, but I guess factory price will be about Rs 2000 -not too sure
The capacity is being further increased to 100,000 along with the addition of 12 new warehouses - (source: Piccadily Distilleries website)
Previously, the malt spirit produced was being supplied to other alcohol beverage manufacturers as raw material. Now it will go towards production of Indri.
That is why this is a story of forward integration and premiumizaton.
A side note:
Day before yesterday night, at the Delhi International Airportâs Departure Area Duty Free, Indri was completely sold out. Sales representative told me that I was the third customer in last 15 mins who had asked for Indri but they have run out of stock. He said it was already doing well but ever since the award news has come, they keep running out of stock every alternate day despite replenishing it in higher quantities and more frequently.
Other travellers flying out of India from Delhi Airport can also check
Homegrown Single malt market is picking up quite fast. While globally market for single malt whiskeys is is expected to grow at 4.7%, in India, growth is 35%. Its primarily due to culture among youth which is much wider prevalent compared to earlier times and also the migration of people who were used to blended whiskeys. I see existing growth to continue/better for atleast next few years. Few data points:
Each cask will produce approx 122L after accounting for angelâs share. In Scotland this is generally 2-3% but in India because of the hot climate angelâs share is 12-15% per year. That leaves around 122 litres in the cask after 3 years. Taking a conservative estimate each cask produces 10 cases of Indri. Last financial year they sold 15,145 cases of Indri. Which translates to approx 1500 casks. Even if sales increase 10x the number of casks that get depleted per year is 15,000. After three years, a fresh batch completes maturation process. That means they can sustain production of at least 150K (10x of last years sales) cases per year with existing capacity.
Thanks. Can you explain this part a little more please. What is the concept of âangelâ here ?
