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the angel’s share
: the amount of an alcoholic drink (such as cognac, brandy, or whiskey) that is lost to evaporation when the liquid is being aged in porous oak barrels
Up to 1 percent of the volume of the cask can be lost each year through evaporation, sometimes called the angel’s share.
As per UK laws a product sold as “single malt scotch whisky” must be made exclusively from malted barley. Must be distilled at one single distillery (that means no blending with whisky made from various distilleries) and must be aged for a minimum of 3 years. This law is followed globally by all manufacturers. The aging is done in wooden barrels. Since wood is a porous material some of the whisky is lost to evaporation. The word “angel’s share” is a humorous way of referring to the amount of whisky lost to evaporation.
https://www.bseindia.com/xml-data/corpfiling/AttachLive/5acd4b7b-8b5e-4d56-a5f4-73db99393632.pdf
Can someone help decode the latest quarterly results?
Not much contribution from Sugar this quarter compared to Q1 but still the PAT is almost same indicating good performance from the distillery segment .YoY its very nice to see that the sales and margin of distillery has clearly increased.While PBT was 7.21 crore from 93 crores sales in Q2 FY23, this year they have got 17.8 crore from 105 crores sales .This clearly shows the impact of the high margin products . While there is not much to choose between Q1 and Q2 this year profitwise ,atleast it confirms the sustainability of earnings and the relative unimportance of sugars contribution to company fortunes. Since all the festivals and that publicity of best whisky happened at end of september, one can hope for a much visibly better result in Q3.
Disc. Invested from below 40 levels .
Hi Sahirji- any idea if company will have any incremental capacity available which may reflect in numbers of Q3 and Q4 (over and above what it has achieved in Q2). Lot of people have written that Indri was stocked out at many places, so only incremental supply can improve numbers significantly in near term.
Hi Jitender, Not sure if Piccadily can make significant increase in supply in the near term. They have a good product and they have good demand for their products. Supply seems to be the bottleneck. Or the issue could be distribution. Even if production is sufficient if the distribution network is weak; sales will remain weak.
As per the management interview below, Indri production is being geared up to reach 20,000 bottles daily by 2025 from 10,000 currently.
Assuming an EBITDA margin of Rs. 400 approx. per bottle, EBITDA from just Indri alone would be = 20,000 * 400* 365 = ~300cr per year. (Current EBITDA of the entire distillery unit is around 100cr)…So, a huge jump in profits over the next 2 yrs from just 1 product…there are other products which are also growing rapidly and will boost growth furrther.
Indian Whisky ‘Indri’ Crowned World’s Best, Challenges Global Whiskey Giants (jagran.com)
Players like Radico had a realization per case of around Rs. 1600 in its P&A category in FY23. Assuming Rs. 400 EBITDA per bottle of Indri would be too high?
Radicos P&A category has morpheus(1050/ 750 ml bottle),8pm(600/ bottle) and magic moments(950 / bottle) as well besides the really premium Rampur variants . But one would have to assume the pricier Rampur sales less as well and realizations for Rampur is much higher than the blended value for the entire category. Indri sales at 3900/bottle so its bound to do upwards of 2500 or 3000/ case but it would be nice to get a more accurate figure .
I agree that the P&A of Radico is not directly comparable to Indri’s realizations for the reasons you pointed out. However, even if we assume a realization of 2500-3000 per case for Indri, generating an EBITDA of Rs. 400 per bottle would be too high.
1 case would have 12 bottles of 750ml each, so an EBITDA of Rs. 400 per bottle will translate to an EBITDA of Rs. 4800 / case.
I am weak in maths but even I know 3000/case does not translate to 400/ bottle. The point is all these are assumptions and it would be nice to get some more accurate pointers like… how much is the average realization for single malt whiskey bottles worth 4k to 6k in India ?
Piccadily Agro’s Distillery biz which until now is dominated by the cheap cuntry liquor has an EBITDA margin of 16-20%.
For single Malt, it is perfectly reasonable to assume EBITDA Margin to be greater than 25%.
Even if Indri ex-factory selling price was 1600, its EBITDA margin per bottle would be greater than 25% ,i.e, greater than 400 per bottle.
For 20,000 per day, it means = ~300cr EBITDA from Indri alone.
Add country liquor (which is also growing quite rapidly) to that, Piccadily Agro’s distillery unit would be throwing out ~400cr of EBITDA per year in a couple of years from now.
Radico which has EBITDA of 400cr, trades at 22,000cr Mcap.
I feel Piccadily Agro is a bargain buy at this price.
(PS: Indri continues to go out of stock despite frequent replenishment of stock in many small towns in North India - shopkeepers says huge demand and popularity - one can check themselves)
So, we are saying that Piccadily would sell around 20000 * 365 bottles an year ~ 6 lakh cases an year. As per this article, in 2022, total scotch sales were at ~ 3 lakh cases and total Indian single malt sales were at ~ 3 lakh sales. If you look at the growth of Glenlivet in the last 9 years, it went from 27500 cases per year in 2014 to 88000 cases in 2024 at a CAGR ~ 13. Momentum seems to have picked after covid but this growth could also be attributed to the dip in sales during covid. Single malt sales are growing at a CAGR of 20% from 110,000 in 2014 to 577,000 in 2023. Assuming the same growth rate for 5 years, they might probably hit around 38k cases per year. I am not sure of the margins per bottle but the 6 lakh number seems too big to achieve. Correct me if I am wrong.
That article is only mentioning sales in India .Its not necessary to sale only in India …right ? Piccadily had bought one distillary in UK and already sales 30% of its total sales in 15 foreign markets as per the articles sited in this thread .
However, tripling production does not mean trippling sales …there are lots of other variables to consider .a single product will surely not beat every other single malt in everyones taste.But they do have Kamet,Camikara etc. and going by their silent but robust execution of a longterm plan for the past 10 years or so , its not too fantastic to expect them to excel in future as well .
Disc… invested from below 40 levels … 2x of invested capital taken out by selling a third of holdings.I intend to kèep the rest for long term.
As per the below article, Indian Single Malt have been growing at CAGR of 50% over the last 5yrs. So, in 2 yrs market size should double. Already, Indri keeps going out-of-stock in so many places in North India.
Also, please note that a large proportion of production of Indian Single Malts is exported. ( from 30-50% depending upon the brand) which is additional demand.
Total size of Indian whisky market, overwhelming majority of which is mass product, is 242 million cases (a case is made of 12 bottles) which is also growing rapidly. Now, even a small shift of say 5% from mass to premium single malt whisky product due to rising affluence and affordability of Indians will lead to exponential demand growth for the premium single malt whisky.
I tried to find Indri, asked for it at 4 shops in Whitefield, Bengaluru on 24 Dec but everywhere it was out of stock. One thing I noticed that everyone knew about Indri.
For me, as an investor, this is a problem the Company should address on priority. I live in Delhi, I have been to shops 5 times to buy Indri (Delhi and Gurugram included). Everytime the shop keeper says it is out of stock. I have been able to buy it once, yes it tastes good. But the other 4 times, that I could not get it, I ended up buying some other brand.
The Company is losing a lot of potential sales due to laid- back (for lack of a better word) marketing and distribution strategy. Usually, one would buy some other brand if Indri/ any other particular is not available, as the main purpose is to drink/ enjoy!
Booming domestic demand for Indian Single Malt - Radico Khatian running short of malt forcing it to halt international expansion plans.
Radico Khaitan Left With Limited Stock As Indian Single Malts Take On Scotch (ndtvprofit.com)
It is available in Madhuloka Varthur road. Not available in Sling and other stores in Whitefield.
