Som Distilleries & Breweries Q1 FY27 earnings call

The first quarter of FY27 proved to be extremely challenging for Som Distilleries & Breweries, primarily due to operational and regulatory disruption^🌐s. Consolidated volumes for the quarter stood at 45.79 lakh cases, generating a total income of INR 268.8 crores. EBITDA for the period was INR 15.2 crores. Beer remained the dominant segment, contributing approximately 98.9% of total volume (45 lakh cases) and 93% of total revenue, while IMFL realization improved by 3% year-on-year to INR 1,047 per case.

The company faced significant headwinds from operational and regulatory issues in Madhya Pradesh, which had a substantial impact on volumes and financial performance. Management estimated a revenue loss of INR 250-260 crores due to the MP plant closure. The company continues to incur fixed costs of INR 6-7 crores per quarter for the closed plant, with approximately INR 5 crores attributed to employee costs, although efforts are being made to absorb excess manpower in other units. The resolution of this issue, currently a court matter, is taking longer than anticipated.

A key positive development was the successful commissioning and commencement of commercial production at the Uttar Pradesh unit's brewery on June 9. This new facility adds approximately 10 million cases of annual beer capacity, significantly expanding the company's manufacturing footprint. INR 300 crores were invested in Phase 1 of this project, entirely funded without external debt. The immediate focus for this unit is now on ramp-up, capacity utilization, and market penetration, with peak utilization expected to take 3-4 years.

Despite the difficult operating environment and new capital expenditure, the company demonstrated balance sheet resilience. Gross debt increased by only INR 10 crores during the quarter, with the gross debt to equity ratio moving marginally from 0.3x in March 2026 to 0.31x in June 2026. Furthermore, the company generated INR 28 crores of cash from operations during the quarter, highlighting its underlying financial strength and disciplined approach to leverage.

In contrast to Madhya Pradesh, other operating regions showed resilience. Karnataka experienced a strong rebound with improving demand and market share, leading to a 30% increase in cases sold in Q1. Odisha also delivered a robust recovery, with sales up approximately 40%. These trends underscore the resilience of the company's brands and distribution network in markets where conditions normalized.

For the remainder of FY27, the company's priorities are clear: restore normal operations in Madhya Pradesh, sustain recovery in Karnataka and Odisha, and ramp up the UP facility. Management aims to improve capacity utilization, strengthen its premium portfolio, and convert early signs of recovery into sustainable volume and profitable growth. The FY27 revenue guidance has been revised to INR 1,000-1,100 crores from a previous estimate of INR 1,400-1,500 crores.

The company faced an increase in input costs for cans, malt, and bottles, which rose by approximately 7.5-8% year-on-year in Q1 FY27. While vulnerable to market volatility^🌐, management is implementing measures to control costs. Regarding new products, the company plans to continue focusing on its existing beer portfolio, with potential extensions in some markets. A significant strategic move will be the entry into the Indian single malt category before the end of FY27, aligning with the premiumization strategy.