Detailed Narrative
Robust Growth in Consumer Business, Led by Prestige & Above
Globus Spirits' consumer business delivered strong performance in FY25, with overall revenues growing by 26% year-on-year. The Prestige & Above segment was a key driver, achieving an impressive 186% year-on-year revenue growth and reaching INR129 crores, surpassing the initial guidance of INR100 crores. The Regular & Others segment also contributed significantly, growing by 17% in FY25 to INR864 crores, with an EBITDA margin of 16% for the full year.
Manufacturing Segment Shows Margin Recovery and Stability
The manufacturing business, which contributed 61% to total revenues in FY25, demonstrated notable margin improvement in Q4 FY25. EBITDA margins for the segment rose to 3% in Q4 from 1% in Q3, and the margin per liter increased to INR3. Management expects these margins to stabilize around INR5 to INR7 per liter, attributing this to the availability of raw materials from FCI at stable prices, which reduces volatility.
Strategic Expansion and Brand Portfolio Diversification
The company expanded its brand portfolio by launching 7 new brands, bringing the total to 11 across whiskey, gin, vodka, and rum segments. A significant strategic move was the entry into the beer market in Uttar Pradesh through a joint venture, Globus Ansa India Limited, which launched Carib 500 ml strong beer. The company plans to expand its Prestige & Above portfolio into four additional states this year and is exploring duty-free opportunities.
Key Capex Projects Progressing Towards Commissioning
Globus Spirits incurred a total capital expenditure of INR161 crores in FY25. The multi-feed distillery project in Uttar Pradesh, with an estimated capex of INR115 crores, is progressing well and is expected to be commissioned in Q3 FY26. Additionally, a malt plant in Rajasthan, costing INR29 crores, was commissioned and capitalized in Q1 FY26. These investments are crucial for supporting future growth and improving operational capabilities.
Increased Finance Costs and Working Capital Dynamics
Finance costs increased by INR20 crores in FY25, primarily driven by a INR17 crores increase due to changes in working capital mix and financing for the Prestige & Above segment. Long-term borrowings increased by INR72 crores to fund capex. The company also deposited INR110 crores in advanced excise duty in Rajasthan, financed by short-term borrowings, which is expected to normalize within H1 FY26, impacting current assets.
Outlook on Margins and Market Entry in UP
Management is confident that IMIL operations in Uttar Pradesh will reach breakeven in FY26. Once the UP distillery is commissioned, margins in UP are expected to align with Rajasthan's, in the 16-17% range for the Regular & Others segment. The company anticipates continued robust growth in IMFL, driven by focused efforts on brand expansion and deeper market penetration, despite competitive dynamics in new markets.