Som Distilleries & Breweries Ltd

Rating action

• Long-term ratings downgraded to BB+ with Stable outlook for the company.
• Short-term ratings downgraded to A4+ from A3+.

Instruments rated

• Long-term bank facilities rated BB+ with Stable outlook for Som Distilleries.
• Short-term bank facilities rated A4+ for Som Distilleries.
• Long-term rating for subsidiary Woodpecker Distilleries also BB+ with Stable outlook.
• Short-term rating for subsidiary Woodpecker Distilleries also A4+.

Rating agency

• Infomerics Ratings.

Rationale

• Downgrade reflects temporary suspension of the manufacturing license by the Excise Department.

Outlook

• Outlook remains Stable for both long-term ratings.

Material changes

• From BBB to BB+; A3+ to A4+.

Financial Performance

• Consolidated Q1 volumes: 45.79 lakh cases; total income: INR 268.8 crores; EBITDA: INR 15.2 crores.
• IMFL realization up ~3% YoY to INR 1,047 per case.
• Q1 affected by MP disruption; underlying business showing resilience.
• Cash from operations: INR 28 crores.
• Gross debt up INR 10 crores; debt/equity at 0.31x vs 0.30x.

Operational Update

• UP brewery commissioned; adds approximately 10 million annual beer capacity.
• Beer volume 45 lakh cases; beer ~98.9% of volume and ~93% of revenue.
• Karnataka and Odisha demand recovering; MP plant closure ongoing.
• Hassan ~60% and Odisha ~70% capacity utilization.
• UP capex invested ~INR 300 crores; no external debt; leases disciplined.
• Raw material sourcing: single supplier for cans; vulnerable to packaging costs.

Balance Sheet and Cash Flow

• Finished goods stock at Bhopal ~INR 25 crores; shelf life ~1 month.
• Receivables risk low; government payouts supportive.
• UP capex funded without external debt.

Capex and Projects

• Phase 1 UP capex: INR 300 crores; commercial production started June 9.
• Phase 2: permissions applied; firmer idea in 3–4 months.
• MP license issue: sub judice; resolution expected soon.

Guidance and Outlook

• Restore MP operations; sustain Karnataka and Odisha recovery; ramp UP; improve capacity utilization; premium portfolio growth.
• FY27 revenue guidance revised to INR 1,000–1,100 crores; margins not quantified; update next call.
• Portfolio strategy: build Hunter and Woodpecker as national brands; leverage local contract brewing where margin-friendly.
• Andhra Pradesh expansion: direct sales to start in Sep after approvals.

Q&A Highlights

• Q: Revenue impact of MP closure; A: ~INR 250–260 crores revenue lost in Q1.
• Q: UP Phase 2 timing; A: Phase 2 planning and execution timing to be clearer in 3–4 months.
• Q: MP license risk; A: license matter sub judice; resolution hoped soon.
• Q: Rights issue suggestion for UP2 funding; A: management open to discussion separately.
• Q: Brand portfolio strategy; A: portfolio approach with 5 beer brands; national focus for Hunter and Woodpecker.

Risks and Watchpoints

• MP license dependency and potential revenue impact on guidance.
• Raw-material and packaging cost volatility; single-source packaging risk.
• Regulatory environment and excise duty changes; receivables risk perceived low.

Meeting Details

• Date: 13 August 2026; Q1 FY2026-27 earnings conference call.
• Type/Mode: earnings conference call; recording uploaded.
• Event/Organizer: call hosted by Som Distilleries & Breweries Limited.
• Recording: audio available via company site; transcript to be uploaded later.
• Results: Un-Audited standalone and consolidated results for Q1 FY2026-27.

Purpose

• Purpose: inform investors that the Q1 call recording is uploaded.

Business Overview

• Core business is beer and IMFL with premiumisation focus.
• Four-location manufacturing footprint expanded via UP; Woodpecker Agri venture established.

Key Operational Highlights

• UP plant commenced commercial production, adding 10 mn beer capacity.
• Karnataka rebound and Odisha recovery supported volumes.
• Total quarterly volume 45.79 lakh; beer dominates revenue.
• Woodpecker Green Agri commenced commercial production in UP.

Financial Performance

• Total income ₹268.8 crore; YoY decline about 49%.
• Gross profit ₹76.1 crore; gross margin 28.33%.
• EBITDA ₹15.2 crore; EBITDA margin 5.70%.
• PAT ₹1.6 crore; PAT margin 0.62%.
• Volume declined 48% YoY; beer 98.9% of volume.

Capital Structure & Liquidity

• Gross debt/equity about 0.31x; debt rose by ₹10 crore in Q1.
• No equity raise or rating changes disclosed.

Strategic Priorities & Outlook

• Recovery across Karnataka and Odisha; MP normalization is key catalyst.
• UP scale-up and four-location footprint to drive volumes.
• Premiumisation focus with selective premium launches.
• Woodpecker Green Agri as supply platform.
• Commercial production start in UP strengthens growth pipeline.

Risks & Mitigation

• Bhopal license disruption reduced volumes; recovery underway.
• Raw material and packaging costs pressured margins.
• MP regulatory issues addressed; normalization expected.

Governance & Leadership

• No governance or leadership changes disclosed in this quarter.

Business Overview

• Beer and IMFL manufacturer with four plants in UP, MP, Karnataka, and Odisha.
• UP footprint expanded; Woodpecker Green Agri commissioned; UP plant adds 10 million beer capacity.
• Premiumisation focus increasing high-end product share across markets.
• Mahavat mid-premium whisky launched in MP, Delhi, UP at ₹1,000–₹1,100.
• Local manufacturing bases to replicate model for broader market access.

Operational Highlights

• Q1 volume 45.79 lakh, down 48% YoY.
• Total income ₹268.8 cr; EBITDA ₹15.2 cr; PAT ₹1.6 cr.
• Gross margin 28.33%; EBITDA margin 5.70%; PAT margin 0.62%.
• Gross debt-to-equity 0.31x; debt up ₹10 cr in Q1.
• Beer accounted for 98.9% of volume; 93.3% of revenue.
• UP plant now commercial; Karnataka and Odisha recovery underpins revival.
• Markets: Bhopal license disruption reduced volumes; recovery underway.

Financial Performance

• Total income ₹268.8 cr, down 49% YoY.
• EBITDA ₹15.2 cr; margin 5.70% (vs 13.60% prior year).
• Gross profit ₹76.1 cr; gross margin 28.33%.
• PAT ₹1.6 cr; PAT margin 0.62%.
• Debt/Equity at 0.31x; gross debt up ~₹10 cr in Q1.

Capital Structure & Liquidity

• Balance-sheet leverage remains near 0.3x despite capacity additions.
• Debt increased modestly in Q1; no material leverage step-up reported.

Strategic Priorities & Outlook

• Recovery expected to translate into sustained volumes; MP normalization a key catalyst.
• UP scale-up to drive growth and regional market penetration.
• Premiumisation to broaden portfolio in select markets.
• Replicate local manufacturing model to deepen market access.
• Focus on converting capacity expansion into continued volume recovery.

Risks & Mitigation

• License-related disruption at Bhopal temporarily reduced volumes.
• Rising raw material and packaging costs pressured margins.
• Recovery in Karnataka/Odisha and UP scale-up provide offset.

Financial results

• Un-Audited standalone and consolidated results for quarter ended 30 June 2026 approved, with Limited Review Report.
• Extract of results enclosed; to be published in newspapers and on stock exchanges.
• Results available on BSE/NSE and the company website.

Meeting Details

• Date: 13 August 2026, 2:00 PM IST.
• Type: group analyst/institutional meet; Mode: virtual conference call.
• Event: Q1 FY2027 Earnings Conference Call; Organizer: Som Distilleries and Breweries Limited.

Participants

• Key company roles: Chief Operating Officer; Director, Finance & Strategy.

Purpose

• Discuss Q1 FY2027 results; interactive Q&A.

Additional Notes

• Details and materials available on the company website.