Som Distilleries & Breweries Q3 FY26 earnings call

Som Distilleries reported a subdued Q3 FY26 with a total income of INR 254.2 crores. EBITDA stood at INR 23.1 crores, resulting in a margin of 9.1%, while net profit was INR 5.5 crores with a margin of 2.2%. These figures reflect the challenges faced during the period, primarily due to adverse weather conditions and pricing pressures in key markets.

Beer volumes experienced a significant 24% year-on-year decline, reaching 35.3 lakh cases in Q3 FY26, attributed to cold weather and slow recovery in Karnataka. Conversely, the IMFL segment showed robust growth, with volumes increasing by 46% to 5 lakh cases. Beer realization improved to INR 543 per case from INR 516 in Q3 FY25, while IMFL realization saw a decline to INR 988 per case from INR 1,068 in Q3 FY25, indicating pricing pressures in that category.

The company is making significant progress on its INR 570 crores greenfield project in Uttar Pradesh. Phase 1, involving an investment of INR 370 crores for a brewery with a 1 crore case capacity, is expected to be completed by June 2026. Financial closure for both phases has been achieved, securing long-term funding and providing visibility for project execution. This project is anticipated to generate INR 650-700 crores in top line revenue at 80-85% capacity utilization.

Q3 FY26 performance was significantly impacted by more-than-expected cold weather in key markets like Madhya Pradesh and Delhi, leading to reduced beer consumption. The company also faced regulatory challenges^🌐, including the suspension of its Bhopal plant license, with a court decision expected shortly. Management stated that fresh production from the Bhopal plant is currently halted, but they are working towards a swift resolution.

Gross margins were impacted in Q3 FY26 due to a shift in product mix, specifically a lower contribution from the higher-margin Hunter brand, and rising input costs. Barley prices increased by 5-6%, and glass bottle prices rose by 3-4%. Management noted that these cost increases are difficult to pass on due to the annual excise policy, but they expect a revival in gross margins in Q4 as the season begins.

The company is actively pursuing market expansion, with an update on Andhra Pradesh entry expected soon, potentially allowing supply within Q4 FY26. The Mahavat brand has expanded to Delhi and UP, showing improved penetration and consumer response. Management remains cautious with new launches, ensuring success in current markets before expanding further to larger markets like Maharashtra and Karnataka.