Mixed Move in Liquor Stocks: United Spirits, Radico Fall; Sula, GM Gain After Maha Excise Hike

Maharashtra government's excise policy hike sparked sharp reactions among top liquor companies stocks like Sula Vineyards, United Spirits, Radico Khaitan, GM Breweries, Tilaknagar Industries, etc. Maharashtra government's revised excise policy is likely to increase state's annual excise collection by approximately Rs 14,000 crore and raise prices of premium foreign liquor brands by 50%.

Liquor Stocks React

United Spirits shares, which enjoyed heightened investors interest amid reports of Royal Challengers Bangalore (RCB) stake sale. Shares of McDowells' No.1 maker, United Spirits, tanked nearly 5% during the pre-market opening session. Additionally, the company shares were trading 6.77% lower at Rs 1501.55 per share on BSE at 1:40 pm with a market capitalisation of Rs 1,09,215.37 crore.

Rampur-based Radico Khaitan share price was trading 3.73% lower at Rs 2555 per share on BSE at 1:50 pm. BSE Smallcap company, Tilaknagar Industries shares were trading 4.66% lower at Rs 343.45 per share on BSE at 1:50 pm.

While several liquor stocks tumbled after Maharashtra excise policy announcement, a certain segment of liquor stocks cheered. Sula VIneyards shares were trading 7.37% higher at Rs 318.9 per share on BSE at 1:50 pm. Similarly, BSE Smallcap company, GM Breweries shares were trading 15.2% higher at Rs 825.55 apiece on BSE at 1:50 pm.

What's Driving Mixed Reaction Among Liquor Stocks?

While Maharashtra government nearly doubled excise duty on Indian Made Foreign Liquor (IMFL), there was no change in the excise duty imposed on beer and wines. Hence, companies which have premium liquor brands in their portfolio like Radico Khaitan, United Spirits, etc, will be negatively impacted by Maharashtra excise policy. Wheras, Sula Vineyards, GM Breweries, shares rallied significantly. Sula Vineyards is a prominent winemaker.

Maharashtra Excise Policy

The Maharashtra state cabinet on Tuesday decided to raise excise duties on various types of alcohol, including Indian Made Foreign Liquor (IMFL), country liquor, and imported spirits. This move is anticipated to affect liquor prices significantly across the state. Additionally, a new category called Maharashtra Made Liquor (MML) has been introduced to broaden the state's revenue sources.

The increase in excise duty is part of a larger effort by the government to address budgetary needs and improve financial health. While, the government has introduced hike in excise duties, wine and beer products are exempted, reported Hindustan Times.

According to an Indian Express report, implementation of excise duty hikes will make a 180 ml bottle of country liquor will cost a minimum of Rs 80, increasing from Rs 60-70. IMFL prices will increase by Rs 115-130, to Rs 205. Additionally, premium foreign liquor increase by Rs 210 Rs 360.

The increase in excise duty is part of a larger effort by the government to address budgetary needs and improve financial health. The changes are expected to have a noticeable impact on consumer prices, particularly for those purchasing premium brands.
This policy shift reflects the government's approach to balancing fiscal requirements with market dynamics.

By adjusting duties and creating new categories, Maharashtra seeks to optimise its revenue collection while managing economic impacts on consumers.
As these changes take effect, stakeholders in the alcohol industry will need to adapt their pricing strategies accordingly. Consumers may also need to adjust their purchasing habits in response to rising costs.