ASSOCIATED ALCOHOL- A POTENTIAL MULTIBAGGER!

Associated alcohol and breweries ltd., one of the largest distilleries in India operated under KEDIA group! Incorporated in 1989 its a 1kmillion liquor conglomerate

Talking about the co. and its brand, the management is proving itself every-time, during every-qtrs, every-year! The co. has some licensed brands-
1) Smimoff Vodka
The world’s leading vodka.
2) Captain Morgan rum
The number 7 spirit brand try volume in worldwide.
3) HAIG Scotch whisky A whisky from the oldest distilling family in Scotland.
4)Masterstroke whisky
The latest brand from liquor company Diageo-Radico.
5)  Glen Drummond single malt scotch whisky
First locally battled single malt premium scotch whisky in India.
6)Royal Crown whisky
Scotch blended grain-based Indian Made Foreign Liquor.

AABL is the leading distillery in INDIA, its the only company to have a presence in every aspect of the value chain. From Extra Neutral Alcohol (ENA), potable alcohol, grain spirit (extra fine grade, triple distilled), rectified spirit and Indian Made Foreign Liquor (IMFL).

Now talking about the owned brands, AABL are having some good products  in their box are very popular in the local market niches and benefit co. by way of higher operating margins and realizations.Some of them are Royal House, James James Bond, Bombay Special, Jamaican Magic and so on!

Now talking about the industry, I don't think there is any need to say about the future of the industry... the demand for alcohols are rising..... increase in income of the consumers/suitable climate in growing economy/ decreasing taxes/ support from gov and various other reasons are responsible for the future growth of the co.! AABL today closing at 118 is still a BUY for a minimum tgt of 200,,,,, initially recommended at 65!!



Talking about the business areas, AABL is involved in bottling vodka and scotch whisky for large reputed international brands. AABL has a ten line bottling operations in two different sections. It packs about 45,000 cases per month and has a production capacity of around 42 million litres per annum (MLPA). AABL's distillery is located in Khodigram, in the Khargone district of Madhya Pradesh. The distillery is presently undergoing a series of transformations that will result in increasing its expanded capacity to 65 MLPA. AABL supplies Extra Neutral Alcohol (ENA), a vital ingredient, to many leading manufacturers under a special agreement. In the IMFL segment, the company has an understanding with reputed companies like Diageo (owner of brands like Smirnoff vodka and Johnnie Walker Scotch Whisky), Mason & Summers and Diageo–Radico. AABL has for long been recognized as one of the finest suppliers of high quality ENA in the Indian market. The company's relationships with leading international and national brands bear ample proof.

AABL has chalked out a huge greenfield expansion plan to capture domestic and international demand and serve all the segments of alcohol ranging from country liquors to IMFL. This plan includes setting up a multi–pressure ENA plant, a collector plant, a Reverse Osmosis Water Treatment Plant and a 2 MW power plant. AABL is setting up a multi pressure ENA plant. This plant will completely replace the older plant and increase its production capacity from the present 42 MLPA to 65 MLPA. The multi–pressure ENA plant cuts down the stages in the manufacture and thus improves process efficiency.

Talking about the financials now,
The company has 5 yr revenue cagr > 35%
5 year profit cagr > 40% yoy revenue growth > 35% profit growth > 100%.
No pledge no warrants no equity dilution no preference capital.
Debt in 2014 was 84.89cr, in 2015 its 38.42 cr and in 16 its 32.72 cr.
Inventories increased around 10% from 2014 to 2016.
Reserves in 2013 was 42.23cr, in 2014 its 48.08cr, in 2015 its 58.66cr and in 2016 its 62.82cr.
Reported Net Profit in 2013 was 3.31cr, in 2014 its 5.84cr, in 2015 its 12.34cr and in 2016 its 14.23cr.
PBDIT in 2013 was 15.5cr, in 2014 its 23.99cr, in 2015 its 35.07cr and in 2016 its 38.66cr.
Quick ratio and Current ratio both increased from 0.62 and 0.79 to 0.81 and 0.87 from 2015 to 2016 respectively.
Return on Net worth in 2013 was6.45%, in 2014 was 10.23%, in 2015 its 18.22%.
ROCE in 2013 was8.86%, in 2014 11.83%, in 2015 21.22% and in 2016 its 24.91%.

After Pioneer Dist and Pincon Spirit its 3rd ranked in case of lowest P/e 12.25 P/e where as big-brand cos like United Spirits and United Brew is demanding 111 and 67.5 P/e respectively! It has posted the Highest operating profit, Sales, NP and PBT in this qtr compared to all the qtrs!! Its OPM stands at 15.3%(qtrly basis). Yearly basis 13.8% highest ever!

Compounded sales growth is 22.45% in last 3years and 26% in last 5 years whereas compounded Profit growth is 62.15% in last 5 years and 64.7% in last 3 years! Reserves have tripled in last 10 years.

Earlier recommended at 65, one can still buy AABL at CMP 118 and on dips for a tgt of 200in coming months!!



UPDATE 24th July, 2018:-
               CMP 280. More than 5.5 bagger touching
421!! Another 1-2 bagger possible in next 3-4 years.



Disc:- All the info are based on my own research. I am neither any advisor nor related to any brokerage houses!! I am myself invested in the stock after my own research. Please do your own research before investing. The writer of this blog won't be held responsible for any of your profit/loss in your investment/trading career!