 "Diageo, Beverages, Liquor, Alcohol")
The growth in the topline will also be helped by the premiumisation trend. | Representative Photo: diageoindia.com
Alcoholic beverages (alcobev) companies in India are expected to report a revenue growth of 8 to 10 per cent in this financial year supported by a revival in consumption of spirits, according to a report by rating agency ICRA.
The growth in the topline will also be helped by the premiumisation trend, it added.
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Moreover, “revenue increase in FY2025 will additionally be supported by the price hikes granted by a few state governments in the current fiscal,” it said.
However, operating profit margin (OPM) is expected to remain stable at 12-13 per cent in FY2025 due to decline in packaging material cost, despite increase in grain prices in H1 FY2025.
“During Q1 FY2025, the spirits industry reported a 9 per cent year-on-year increase in revenues, supported by 5-7 per cent improvement in realisations, while volumes grew by 2-4 per cent,” it said.
Even the beer industry witnessed a higher revenue growth of 12 per cent in Q1 FY2025 owing to 3-5 per cent increase in volumes and 7-9 per cent in realisations.
However, capex by the alcobev companies is expected to moderate to 2-3 per cent of their operating income in FY2025 and FY2026, as key players have enhanced their capacities recently.
“Companies in ICRA’s sample set incurred capital expenditure (CAPEX) of more than Rs 1,000 crore each in FY2023 and FY2024, around 4 per cent of their operating income, indicating an investment revival after the pandemic,” it said.
This capex was primarily towards distilleries and brewery capacity additions and enhancement of manufacturing infrastructure, including maintenance.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
First Published: Oct 07 2024 | 9:56 PM IST
