Associated Alcohol and Beverages – CMP – 466

Recommendation: BUY

Fundamental Grade : A Grade

Brief about the company:

The Company is one of India’s prominent producers of ENA, a critical resource for the production of premium liquor. It is diversifying to the manufacture grain-based ethanol to capitalise on a favourable government policy. The Company is investing in state-of-the-art bottling facilities for premium liquor manufacture. As a prominent player in the industry, the Company has established itself as one of the country’s largest distillers, enjoying a strong presence across five States. With a significant focus on Madhya Pradesh and Kerala, these regions serve as the primary drivers of our revenue, reaffirming company’s position as a leading player in the market.

Performance during Last 5 years:

Revenue grown at a CAGR of 17% and profit grown at a CAGR of 10% whereas share price reported CAGR return of 13%during this period. Return on equity for the past 5 year is above 20%.

Future Outlook:

Company intends to commission a 130 KLPD ethanol manufacturing capacity in FY 2023-24. The Company was also engaged in enhancing the bottling capacity at its Indore plant from 1 Mn cases a month to 1.5 Mn cases a month. The Company is embarking on a premiumization journey with the launch of a range of products.


At CMP, the stock is trading at PE of around 18 and P/B of around 2.18 which provides reasonable safety at current market. Further, the market capitalization is at 10-12 time cash flow which is also reasonable.

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