In FY20-22, Globus Spirits experienced unprecedented growth driven by healthy demand, favorable government policies, and raw material prices, positioning it as a key player in the ethanol and ENA segments. However, as industry challenges such as rising input costs, regulatory hurdles, and changing market sentiments emerged, the prospects began to dampen, leading to subdued performance over FY22-25.
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We initiate coverage on Globus Spirits with ‘Buy' rating & SOTP based target price of Rs 1,600 on FY27E multiples, implying ~31x FY27E EPS. Incorporated in 1993, Globus Spirits is a noteworthy player in ENA/Ethanol (manufacturing) and Country Liquor (IMIL) segment.
Over the past three years, it has strategically positioned itself to emerge as a leading branded IMFL AlcoBev player. Globus Spirits, after earning super-normal profits over FY20-22 went through severe earnings decline over FY22-25 led by steep increase in raw material.
We expect headwinds to recede over FY25- 27E, positioning Globus Spirits' all three segments (manufacturing, IMIL, & IMFL) for strong growth driving superior 37% Ebitda and 101% EPS CAGR (subdued base) over FY25-28E.
The IMFL business is projected to be atleast a five-seven year growth story (Globus Spirits has the right to win) and drive multiple re-rating if executed well.
The company is currently trading at 28/18x FY26/27E EPS.
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