I think India has a strong preference for whiskey, and USL, with its extensive portfolio of whiskey brands, benefits significantly. The 7.2% CAGR for whiskey consumption further supports this advantage. While brandy is popular in South India, its market share is smaller compared to whiskey’s nationwide appeal.
However, Radico Khaitan till 2019 use to get PE between 30-40 only but it’s valuation increased when its margins crossed 16% with strong sales growth. Tilaknagar Industries is currently positioned similarly to where Radico Khaitan was before its valuation surge. It boasts a debt-free balance sheet and has generated free cash flow in the recent quarter. This financial strength allows Tilaknagar to reinvest in its business, as evidenced by recent investments in brands like Bartisans gin, Sitara gin, and Samsara rum. There are also rumors of Tilaknagar’s interest in acquiring the Imperial Blue whiskey brand (sales in India would be approximately 5000 crore).
CRISIL Ratings has upgraded Tilaknagar Industries Ltd’s outlook to ‘Positive’ and reaffirmed its rating at ‘CRISIL A-’ due to improved financials and becoming net-debt free by September 30, 2024.
Tilaknagar Industries Limited, has prepaid its entire outstanding term loan of Rs 36.74 crores from Kotak Mahindra Bank Limited (“Kotak Bank”) on December 27, 2024.
Management is walking the talk now. FCF can be utilised for organic/inorganic growth. A BIG POSITIVE!
Completely agree with you, This is the only Stable Company which I could find Reasonably valued against its competitors. With nil debt and increasing sales Including Sales, from its recently acquired investments, will definitely boost the bottom line of the company. I could hardly find any red flags. Only thing I am uncomfortable about is promoters have been selling their holdings though It is marginal, but still a red flag.
The promoter’s share sales since 2019 were primarily driven by the need to repay a substantial debt of 1200 crore, even when the company’s market capitalization was only 600 crore. This highlights the crucial principle that it’s always preferable to ensure the company’s survival by selling a portion of ownership rather than facing complete financial collapse.
I think Mr. Amit Dahanukar is an excellent leader who turned around the company in such a short period. This is the reason why seasoned investor like Madhu kela sir invested 126cr in the company.
