Corporate Finance -I

BREWERIES ANALYSIS

Submitted To-
Prof. Chakarapani
Group No. : 1
Riya Singh 19A2HP403

Ritesh Kumar 19A1HP053

Shivam Khare 19A1HP048

Rishab Singhal 19A3HP632

Mohd. Zaid Nafis 19A1HP102

Jayshree Garodia 19A1HP017

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 A brewery or brewing company is a business or a company that makes and sells beers. A
brewery or a beerhouse is place where beer is commercially made. The distinct sets of brewing
equipment are called plants. Beer is produced in wide range in the volume and variety by the
beer companies. Small breweries such as Ring Wood Breweries to massive multinational
conglomerates like Molson Coors that produce hundreds of millions of barrels annually.

For our analysis, we have chosen;

Two Large Companies –

 United Breweries Ltd. of market capitalization 32299.73 INR

 United Spirits Ltd. of market capitalization 42835.35 INR

Two Medium Companies –

 Radico Khaitan Ltd. of market capitalization 3990.94 INR

 GM Breweries of market capitalization 740.24 INR

One Small Company-

 IFB Agro Limited of market capitalization 359.93 INR

 Globas Spirit Ltd. of market capitalization 129.60 INR

Analysis of Beta of the companies chosen

Beta is a measure that indicates how volatile the investment is when compared to the market as a
whole.

Beta of less than 1 indicates that the investment is less risky and less volatile and more than 1
implies the stock is more risky and highly volatile.

Company Beta Result

United Breweries Ltd. 0.2726 Less Risky and Defensive
United Spirits Ltd. 0.02 Less Risky and Defensive
G.M.Breweries Limited 1.084196 Risky and highly volatile
Radico Khaitan 1.5040 Risky and highly volatile
Gobus Spirits Ltd 1.44 Risky and highly volatile
IFB Agro Limited 2.40 Risky and highly volatile

Above analysis suggest that the companies chosen, highest risk is associated with IFB Agro
which is a low cap company and lowest risk is with United spirits which is a large cap company.

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 Comment on the capital structure of the company by comparing it with other companies
that the group has chosen. Now we look at the capital structure of the companies.

United United G.M. Radico Globus IFB

Breweries Spirits Ltd. Breweries Khaitan Spirit Agro
Ltd. Limited Limited
Equity 133574.1
31837700 2152960.09 36682.05 9 3978.819 3695641
Debt 754300 7601000 438.68 32325.62 2298.2 200.9
Total 29124960.0 165899.8
32592000 9 37120.73 1 62770190 3695841.9
Equity 0.97685628
Weight 4 0.8051 0.6338707
0.687 0.9882 9 0.9998
Debt 0.02314371
Weight 6 0.1949 0.3661292 0.08810353
0.22 0.0118 1 4
Beta 0.2626 0.02 1.084196 1.50407 1.44 2.4016
Growth 15.12% 84% 26% 93% 107.178% -338%
Rate
(Estimated)

From the above capital structure, an analysis0 can be made that companies are more on the
equity weightage as compared to debt

Comment on the results by comparing it with the results for other companies in the similar
group.

Large Cap

United Breweries Ltd. United Spirits Ltd.

Beta 0.2625 0.02
Market Cap (Cr) 32299.73 42835.35
Market Price of share 1405.612 590.2
Average weight of debt in the 0.023143716 0.22
capital structure

Medium Cap

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 Radico Khaitan ltd G.M. Breweries Limited
Beta 1.5040 1.084196
Market Cap (Cr) 3990.94 740.24 INR
Market Price of Share 298.9 405
Average weight of debt in 0.1949 0.0118
capital structure

Small Cap

IFB Agro Ltd Globus Spirits Ltd

Beta 2.401 1.44
Market Cap (Cr) 359.93 129.60 INR
Market Price of Share 381.85 130.1
Average weight of debt in 0.088103534 0.366129
capital structure

Assumptions:

 Since there are no clear mid-cap companies in the sector we have taken the closet mid-
cap company possible.
 All figures have been taken from the financial of the respective companies.
 Categorization of large, mid-cap and small companies is done on the basis of market
capitalization.
 Debt includes long term borrowings.

Source and Reference-

 www.moneycontrol.com
 www.yahoofinance.com
 Prowess Database

 BEF. (2018, october). Retrieved from https://www.ibef.org/industry/textiles.aspx

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