Globus spirits IPO

Globus Spirits ipo opened up on Aug 31, 2009 and till date has received only 11 pc subscription though it will likely mop up the necessary subscription in the course of the week and will most likely close at full subscription.

Let us first look at the IPO details

Price band – Rs. 90 – Rs.100

Issue size – Rs. 75 cr at upper end price with 75,00,000 equity shares

Book Value – Rs. 54.75

Lead Managers - SREI Capital Markets Ltd

Keynote Corporate Services Ltd

Globus Spirits – The Company

Globus Spirits was incorporated in the year 1992 and since this company ahs expanded into the two major alcohol segments and that are the Indian Made Foreign Liquor and the Industrial Alcohol.

The company has launched its own IMFL brand in Haryana and will be launching a few brands in a seven other states. That said it also manufactures the IMFL for reputed Indian brands.

The main stay of the alcohol operations is the distilleries and the company has two distilleries which are :

Behror, District Alwar, Rajasthan

Samalkha, District Panipat, Haryana:

The total capacity of the units together is about 288 lalh bulk litres called as BL.

Here are some of the brands that are there for the company

White Lace Gin White Lace Dry Gin

White Lace Duet Gin GR 8 Times Dry Gin Samurai Gold Extra Rich Blend Whisky

Samurai Premium Whisky 20-20 Premium Whisky

20-20 Superior Whisky

GR 8 Times Whisky

GR 8 Times XXX Rum

Hannibal Legendry Rum

Hannibal Legendry XXX Rum

Samurai XXX Rum

Samurai Grape Brandy

Samurai Superior Grape Brandy

Samurai Superior Whisky

Academy Deluxe XXX Rum

Academy Deluxe Brandy

Reasons for the Issues

Installation of multi-pressure distillation plant

Brand development and marketing

Capacity expansion

Brand acquisition

Alcohol Industry

IMFL liquor is sold at less than Rs.200 per litre and even at that price it has huge customer base and the alcohol consumption in other categories is les which are the Premium and the super premium categories.

Major competitors are the United Breweries, Shaw Wallace and Mohan Meakins.

Globus Spirits ipo – should you invest?

Yes the reason being

Less expensive than similar players with the price being 7.4 times the Q1FY10 annualized EPS. This as compared to others is less expensive.

Launching its own brand will improve margins

The molasses base helps in getting the basic material for producing country liquor.

and other seven northern regions

Update : Another Ipo worth looking at is the Oil India Ipo

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