Som Distilleries & Breweries Limited

Som Distilleries reported a total income of ₹530.1 crores for Q1 FY26, reflecting a modest 3.2% year-on-year growth. The company achieved an EBITDA of ₹72.1 crores, resulting in a 13.6% margin, and a net profit of ₹42.1 crores with a 7.9% margin. Total sales volume for the quarter was 8.9 million cases. While beer volumes, at 8.5 million cases, saw a 2.5% decline year-on-year, the IMFL segment demonstrated strong performance with 0.4 million cases and a 58% year-on-year growth. Beer realization improved to ₹566 per case, up from ₹550 in Q1 FY25.

The Q1 FY26 performance was significantly impacted by unseasonal rains and higher excise duties in Karnataka, leading to an estimated 20% decline in the state's beer industry. Som Distilleries experienced a 4-5% loss in market share in Karnataka, with its share falling from 17.5-18% to 12.5-13%. The excise duty on some brands initially surged from ₹600 to ₹1,050 per case before being rolled back to ₹750-800. Management anticipates a recovery of 2-3% market share in Karnataka during Q2 and Q3 FY26, expecting volumes to normalize post policy adjustments.

The company's Phase-I execution of the UP project is progressing as per schedule, with a total capital outlay of ₹370 crores. To date, approximately ₹55 crores have been spent on this project. Phase-I focuses on establishing a brewery with a capacity of 1 crore cases per annum, which is expected to be commissioned by H1 FY26-FY27, specifically by August or September 2026. Phase-II of the project will include setting up a bottling plant for IMFL and a distillery, highlighting a strategic long-term commitment to the large UP market.

The IMFL segment is a key growth driver, achieving a 58% year-on-year volume growth in Q1 FY26. Mainline brands like Hunter and Power Cool contributed to this growth, and the recently launched Mahavat Whisky in the mid-premium segment in Madhya Pradesh has received a positive response. The company plans to continue aggressive innovation in the IMFL segment, with a Single Malt product in the pipeline, and aims to entrench Mahavat in North markets. While IMFL currently accounts for 10% of total revenue, management does not expect it to reach 15% this financial year.

Management reiterated its commitment to improving corporate governance, citing the induction of independent directors with strong repute. Addressing past concerns, they clarified that a child labor issue was related to a private company and was deemed 'unnecessarily targeted,' with no ongoing litigation. Furthermore, promoters expressed a long-term intention to increase their stake from the current 40% to 51%. This increase could be achieved through open market operations or preferential issues, adhering to the regulatory limit of 5% per year.

As of June, the company reported gross debt of ₹199 crores and net debt of ₹180 crores. Management clarified that the increase in debt was temporary, primarily due to higher cash credit utilization, and expects these levels to normalize in the coming quarters^⏳. Despite the Q1 challenges, the company revised its FY26 revenue growth expectation to 15-16%, targeting ₹1,650-1,700 crores, down from the earlier 20-22%. They also anticipate maintaining or achieving higher margins compared to the previous year, expressing confidence in a strong recovery in the coming quarters^⏳.