GLOBUSSPR - Globus Spirits Limited Share Price

In the Q1 FY26 earnings conference call, Globus Spirits Limited's management provided an optimistic outlook, highlighting significant progress and growth potential across various segments. The key points include:

1. Prestige & Above Segment: Management reported that this segment achieved nearly breakeven, a milestone reached sooner than expected. It showed a remarkable 50% year-on-year growth and 36% quarter-on-quarter increase in revenue. This segment is poised to be a major growth driver going forward.

2. Revenue Contributions: The consumer business contributed 39% of total revenues, with a 14% year-on-year and 9% quarter-on-quarter growth. Capacity utilization improved to 81%, with expectations to exceed historical levels of 90% in the near term.

3. Manufacturing Footprint and Margins: The EBITDA margin in manufacturing improved to INR6 per liter. Management anticipates this to average INR7 per liter due to enhanced utilization of maize and stable raw material pricing. There is a focus on increasing maize use in East India and consolidating rice in North India, which is expected to reduce margin volatility.

4. Expansion Plans: The upcoming multi-feed distillery project in Uttar Pradesh is on track for commissioning in Q3 FY26, important for capturing the profitable Uttar Pradesh market.

5. Financial Strategy: The management successfully reduced net debt by INR40 crores and aims to continue improving financial performance while maintaining a disciplined approach to expansion and profitability.

In summary, management remains positive about the trajectory of the business, focusing on sustainable growth, improved profitability, and strategic expansions in key markets. The financial outlook suggests continued revenue growth, accompanied by enhanced margins as operational efficiencies are realized.

Questions and Answers from the Globus Spirits Q1 FY26 Earnings Call

1. Question: "Do you think currently the lowest hanging fruit is UP's IMIL market and the new excise policy of the government has a direct relation with it?"

   • Answer: Yes, UP is indeed the lowest hanging fruit for us. The state has demonstrated a stable excise policy and confidence from stakeholders, providing a solid opportunity for us to capitalize on going forward.

2. Question: "How much of the 10 million cases per month market globally will you capture in the next 2 years?"

   • Answer: We don't quantify specific targets, but we are cautiously ambitious about establishing a solid foothold in this expansive market, aware that substantial growth can take time.

3. Question: "Why is there a gap in expected EBITDA from manufacturing sales?"

   • Answer: The manufacturing numbers included in-house consumption. If you exclude that, you'll find the figures align more closely. External sales will give us a clearer picture of EBITDA.

4. Question: "Why is capacity utilization lower at around 81%?"

   • Answer: We've had reduced utilization in the past quarters due to unfavorable raw material scenarios. However, we're aiming to reach historical stable levels of over 90% as we progress.

5. Question: "What are the exceptional revenue mix factors leading to a decline in EBITDA?"

   • Answer: The margin guidance for our regular business is around 17%. Last year's Q1 had unusually high margins due to favorable sales mix; this normalizes our expectations.

6. Question: "Can you comment on the state of raw material prices?"

   • Answer: Prices have stabilized, with maize at around INR22-23 per liter. We expect to maintain healthy margins given our strategic forward contracts.

7. Question: "What are your IMFL business profitability targets for FY26?"

   • Answer: We aim for breakeven by the end of FY26, continuing to grow our market presence while being cautious about our costs and investments.

8. Question: "What are the margins in the luxury segment?"

   • Answer: For the luxury brands, we aim for an EBITDA margin similar to our established peers, generally between 15-18%. As our portfolio expands, we'll refine our expectations based on performance.

9. Question: "What is your strategy regarding the malt facility in Rajasthan?"

   • Answer: The malt facility is strategic for maintaining control over product quality, especially for our single malt offerings. While it supports our luxury segment, it's crucial for overall consistency.

10. Question: "What can we expect for capacity utilization in upcoming quarters?"

    • Answer: We aim to exceed the current 81% capacity utilization mark, potentially reaching over 90% as we move further into this fiscal year.

This summary encompasses the major inquiries from the Q&A section along with detailed responses provided by the management, adhering strictly to the character limit specified.