Unlisted Shares

Allied Blenders and Distillers Limited (ABDL) is a prominent Indian alcoholic beverages company, ranking among the largest domestically owned Indian Made Foreign Liquor (IMFL) enterprises.

Product portfolio - The company boasts a diverse product portfolio comprising Indian Made Foreign Liquor (IMFL) brands spanning whisky, brandy, rum, and vodka categories. Notably, several of these brands, including Officer's Choice Whisky, Sterling Reserve, and Officer's Choice Blue, have achieved the status of "millionaire brands". In addition to alcoholic beverages, the company extends its product range to include packaged drinking water sold under the Officer’s Choice, Officer’s Choice Blue, and Sterling Reserve brands.

Geographical presence - Evolving from a singular brand entity to a diverse portfolio of unique offerings, ABDL now utilizes top-tier processes to ensure the highest standards of quality and taste across its range of products. These goods are distributed in more than 20 countries, including but not limited to the USA, UAE, Russia, Malaysia, and others.

Revenue Growth - For FY23, the company has experienced a year-on-year revenue growth of 17%. Over the last five years, the revenue has increased by 4%, however, it's worth noting that this growth rate falls below the industry average of 8%.

​Key Stakeholder - The major stakeholders of the company are the promoters, namely Bina Kishore Chhabria, Resham Chhabria, and Nisha Chhabria, who collectively own a significant 96.21% stake in ABDL. This substantial ownership stake has been acquired through a combination of institutional and individual investments, underscoring the promoter's strong confidence in and commitment to the company and its ongoing operations.

Investment Thesis -  The company has witnessed a decline in profit margins, marked by a 6% reduction in EBIT, coupled with a nearly 12% increase in total expenses. The primary factor contributing to this margin contraction is the significant surge in prices of key inputs. Furthermore, the escalating prices of packaging materials, especially glass, have added to the pressure on profit margins.

The company appears to be highly overvalued based on its Price-to-Earnings (P/E) ratio, which stands at 1,671x, in stark contrast to the industry's P/E ratio of 41x. After conducting a comprehensive analysis, the intrinsic value of the company is estimated to be < Rs. 5 per share. This valuation takes into account various financial metrics and performance indicators to determine the underlying worth of the company's shares. Investors should approach this situation with caution, conducting thorough due diligence to understand the underlying reasons