SDBL

Symbol: SDBL
Date: 23/03/2024
CMP: ₹272
Market Capitalization: ₹ 2,108 Cr.
Credit Rating: BBB+
TTM PE:25.8
Disclaimer: All information is for educational and informational purpose only and should not be treated
as a Buy/Sell recommendation. I am not a SEBI registered analyst. Do your own research and analysis
before investing/trading in the stock market or consult a SEBI Registered Investment Advisor.
Investing/Trading in Stock Market is subject to Market Risk and may lead to financial losses.
Company Summary:
Som Distilleries & Breweries Limited (SDBL), headquartered in Bhopal, is a leading entity in
India's alcoholic beverages sector. With a primary emphasis on brewing beer and blending and
bottling Indian Made Foreign Liquor (IMFL), they offer a diverse array of products tailored to
meet varied consumer preferences across different price segments. Their product portfolio
encompasses an extensive range of options including beer, rum, brandy, vodka, and whisky.
Promoter Details:
• Mr. J.K. Arora, as the founder and visionary leader, has steered the group's growth with
strategic planning and innovation. His leadership has been central to Som Group's
achievements, emphasizing a distinctive partnership model based on sustainable
development principles.
• Mr. A.K. Arora, a skilled technocrat and adept executor, oversees commercial and
purchasing operations. With an MBA and an Engineering Bachelor's Degree, his diverse
background adds versatility to his leadership. His vision sustains Som's leadership in key
industry sectors, notably as an established alcoholic beverage brand. Renowned for
strong interpersonal skills and dedication, he has been instrumental in building an
innovative enterprise.
• Mr. Deepak Arora, with a Business Administration degree from ISB Hyderabad, excels in
operational management, product launch planning, and identifying new business
opportunities. With a background at esteemed companies like Vodafone, he brings a
fresh perspective to the organization marked by optimism, methodical approach, and
strong leadership qualities.
• Mr. Alok Arora, an Imperial College London graduate, brings a wealth of experience from
prestigious companies like Rolls-Royce and Barclays Bank to his role at Som Distilleries.
His international corporate background instills valuable work ethics and vision. Proficient
in startup layout planning, he plays a pivotal role in introducing practices that drive the
organization toward its goals.
Email: khushkothari2004@gmail.com
*Not a SEBI Registered Analyst
*Only for Educational Purpose
Company Overview:
• SOM Distilleries & Breweries Limited (SDBL) is based in Bhopal and is one of the leading
alcoholic beverages manufacturers in India.
• Co. has 5 manufacturing facilities located in Madhya Pradesh, Chhattisgarh, Karnataka,
and Odisha respectively. As of FY23, The Co. has a total installed capacity of
Beer: 30+mn cases p.a.
IMFL: 4+ mn cases p.a.
Bottling Capacity: 9.65 million cases per annum
Blending Capacity: 0.8 million cases per annum.
• The Bhopal plant currently operates at a capacity of 1.52 crore cases, the Odisha
plant at 60 lakh cases, and the Hassan plant at 90 lakh cases.
• SDBL is primarily engaged in production of beer and blending and bottling of IMFL.
Company offers a broad line of products at every price point to cater to varied
preferences of the consumers. The product portfolio consists of various options across
beer, rum, brandy, vodka and whisky.
• The Company has three key millionaire beer brands (sales more than 1 mn cases per
annum) – Hunter, Black Fort and Power Cool. Company’s overall capacity has grown to
30.2 mn cases after expansion, up from 23.9 mn cases before expansion.
• Obtained approvals for Beer and IMFL supply in Rajasthan and Tamil Nadu, with added
authorization from Karnataka Excise for the latter.
• Expanded market presence in Jharkhand, Delhi, and Uttar Pradesh, with plans to target
Kerala and Pondicherry for additional gains.
• Secured strategic partnerships with Carlsberg and Radico Khaitan Ltd for improved
capacity utilization and diversified product offerings.
• The company has partnered with Carlsberg India to enhance production and
distribution of premium beverages in Odisha. This collaboration involves utilizing Som's
advanced plant to manufacture a diverse range of high-quality beverages from
Carlsberg's portfolio, optimizing capacity utilization. It marks a milestone in the
company's expansion, with Carlsberg commencing production at the advanced,
environmentally sustainable Odisha plant to positively impact the local brewing scene
through innovation and quality.
• Signed an MOU with Indian Fashion FZE, UAE for export opportunities in West and
Central Africa.
• Woodpecker Wheat Beer, India’s first filtered wheat beer, has successfully carved out a
niche and is poised for further growth.
Special Information:
Mar '24:
• Promoter group purchased more than 80,000 shares at an average rate of INR 248
per share.
Feb '24:
• Promoter bought 50,000 shares at INR 259 each, totaling INR 1.3 Cr.
Jan '24:
• Board of Directors (BoD) approved raising funds worth INR 350 Cr.
Dec '23:
• Promoter Jagdish Kumar Arora bought 62,000 shares at an average price of INR 287
per share, totaling INR 1.8 Cr.
• Promoter Ajay Kumar Arora sold 46,500 shares at an average price of INR 295 per
share, totaling INR 1.4 Cr.
Aug '23:
• Board of Directors (BoD) approved the allotment of:
• 2.5 lakh shares at INR 275 per share, on preferential basis to Ampersand Growth
Opportunities Fund Scheme I, upon receipt of INR 6.9 Cr.
• 51.5 lakh warrants at INR 275 per warrant, on preferential basis to Promoters (48.5
lakh warrants) and Non-Promoters (Icy Blast Retails and Lakeside Retail), upon
receipt of INR 35.4 Cr (25% of the issue price).
*Products
Q3 FY2024 Financial Highlights and Management Commentary:
Financial Highlights:
• Strong Sales Growth: Net sales for Q3FY24 reached Rs.263.32 crores, a significant
increase of 77% compared to Rs.148.51 crores in Q3FY23.
• Increased Profitability:
o EBIDTA rose to Rs.32.01 crores, representing a margin of 12.2% and a
64.3% increase over Q3FY23.
o PBT (Profit Before Tax) climbed to Rs.23.76 crores, reflecting a growth of
102.5% compared to Q3FY23.
o PAT (Profit After Tax) reached Rs.17.49 crores, signifying a 66.2% increase
from Q3FY23.
Other Achievements:
• Secured official approval for distributing premium beer brands in Tamil Nadu.
• Captured a dominant market share of 45% in Madhya Pradesh's beer industry
(October 2023).
• Launched the "Legend" strong beer brand in Karnataka.
• Established a contract manufacturing agreement in Jammu and Kashmir to produce
IMFL for the Canteen Stores Department (CSD).
Management Commentary:
On IT Raid and Operations:
• Routine search yielded no findings or assessment from IT department, with
operations unaffected, as evident from Q3 numbers.
Volumes (YOY) and Product Developments:
• Sold 44 lakh cases of beer, up by 67%:

- Hunter: 68%
- Black Fort: 59%
- Power Cool: 57%
• Obtained approval from Karnataka Govt to supply premium beer (Hunter,
Blackfort, Woodpecker) to TN, starting in Feb or March.
• Introduced new beer brand "Legend" in KTK, priced below Power Cool.
Market Expansion and Diversification:

• Attained dominant market share in MP's beer industry.
• Initiated contract manufacturing in J&K for IMFL to serve canteen stores.
Raw Material Prices and Capex:

• Barley prices stabilized; glass bottle prices remain elevated, posing potential
RM price fluctuations.
• Expanding Hasan Plant to add 60L capacity, with total 1.5 Cr capacity; capex
cost: 55-60 Cr.
• Setting up small packaging line in Bhopal Plant; additional cost: Rs 5 Cr.
Market Insights and Outlook:

• UP and Delhi contribute 3% and 5% of revenue, respectively, as of 9M.
• IMFL sales at 10%; potential to reach 15% in next 2 years; focus primarily on
beer.
• FY24 revenue target: Rs 1200 Cr; on track with 9M revenue at Rs 899 Cr.
• Management refrains from further guidance on volume growth.
• Interview with CMD J.K. Arora suggests potential revenue of Rs 2000 Cr in
next 2 FYs with expansion into new states, emphasizing focus on distribution,
expansion, and brand enhancement.
Supporting Data:
Financials:
Volume Summary:
Supporting Thesis:
Source: Incred Equity

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SDBL

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Symbol: SDBL

Volumes (YOY) and Product Developments:

• Sold 44 lakh cases of beer, up by 67%:

Market Expansion and Diversification:

Raw Material Prices and Capex:

Market Insights and Outlook:

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