Next week marks the debut of Allied Blenders and Distillers’ IPO, one of several IPOs keeping investors engaged as initial public offerings flood D-Street. On Monday, June 24, the allocation to anchor investors for the Allied Blenders and Distillers IPO is expected. The subscription period begins on Tuesday, June 25, and ends on Thursday, June 27. The price band is set between ₹267 to ₹281 per equity share, each with a face value of ₹2.
The IPO comprises a fresh issue of ₹1,000 crore and an offer-for-sale (OFS) worth ₹500 crore by the promoters and other investors, totaling ₹1,500 crore. Shares will be sold by promoters Bina Kishore Chhabria and Resham Chhabria Jeetendra Hemdev in the OFS.
Allied Blenders and Distillers entered the mainstream premium whiskey market in 1988 with their flagship brand, Officer’s Choice whisky. The company produces, promotes, and sells alcoholic beverages both in India and internationally. Their product line includes multiple IMFL (Indian-Made Foreign Liquor) brands such as vodka, rum, whiskey, and brandy.
Key Points from the Red Herring Prospectus (RHP) for Investors:
Promoters:
The promoters of the company include:
- Kishore Rajaram Chhabria
- Bina Kishore Chhabria
- Resham Chhabria Jeetendra Hemdev
- Bina Chhabria Enterprises Private Limited
- BKC Enterprises Private Limited
- Oriental Radios Private Limited
- Officer’s Choice Spirits Private Limited
Peers:
The firm’s listed counterparts are:
- Globus Spirits Ltd (P/E of 17.26)
- Radico Khaitan Ltd (P/E of 95.87)
- United Spirits Ltd (P/E of 73.16)
Business:
Allied Blenders and Distillers, founded in 2008, is an Indian-made international liquor company. They offer whiskey, brandy, rum, and vodka and market drinking water under the Sterling Reserve, Officer’s Choice, and Officer’s Choice Blue brands.
Product Portfolio:
As of December 31, 2023, the company’s product portfolio included 16 major IMFL brands:
- 10 whiskey brands, including Officer’s Choice Whisky, Sterling Reserve Whisky, and ICONiQ White International Whisky
- 3 rum brands
- 3 brandy brands
- 1 vodka brand
In January 2024, they introduced Zoya Special Batch Premium Gin. Their products span various price ranges within different IMFL categories.
Manufacturing Facilities:
The company’s distillery is located in Rangapur, Telangana, covering 74.95 acres with a built-up area of 25,000 square meters. They can produce 600 lakh liters of extra neutral alcohol (ENA) annually. By December 31, 2023, they had a presence in 22 States and Union Territories in India and significant bottling capabilities. They managed nine bottling units and had agreements with five others, using the full licensed capacity. They also had 18 non-exclusive bottling agreements, including one with a royalty arrangement.
Subsidiaries:
The company has eight subsidiaries as listed in the RHP.
Industry:
India is one of the fastest-growing markets for alcoholic beverages, with consumption increasing from 1.3 liters per capita in 2005 to 3.2 liters in 2023.
Key Risks:
- The company’s PAT margin and profit after tax have fluctuated significantly.
- Increasing competition in the IMFL industry could impact their business, cash flows, and financial status.
Financials:
Despite the effects of COVID-19, the company has shown strong operational cash flow. Their net cash from operations was:
- ₹2,466.18 million (December 31, 2022)
- ₹1,787.60 million (December 31, 2023)
- ₹2,298.55 million (Fiscal 2021)
- ₹1,729.85 million (Fiscal 2022)
- ₹1,439.12 million (Fiscal 2023)
Their restated profit was:
- ₹25.08 million (December 31, 2022)
- ₹14.76 million (December 31, 2023)
- ₹16.01 million (Fiscal 2021)
- ₹28.81 million (Fiscal 2022)
- ₹42.29 million (Fiscal 2023)
Their net worth as of March 31, 2021, 2022, 2023, and December 31, 2022, and December 31, 2023, was ₹3,817.82 million, ₹4,040.98 million, ₹4,060.99 million, ₹4,070.84 million, and ₹4,092.56 million, respectively.
Lock-in Period for Anchor Investors:
50% of the equity shares allotted to anchor investors will be locked in for 30 days, and the remaining 50% will be locked in for 90 days.
Disclaimer: Investors should consult certified experts before making any investment decisions.
