With a bold shift in the alcohol industry, shares of alcohol companies surged on Thursday morning after the Andhra Pradesh Cabinet greenlit a game-changing excise policy. Effective from October 1st, the policy introduces a jaw-dropping starting price of just Rs 99 for select liquor brands, fueling excitement across the industry. However, the initial stock rally cooled by noon. Tilaknagar Industries Ltd.led the charge with shares soaring 7.84 per cent, while United Spirits Ltd. climbed 2.10 per cent. United Breweries Ltd. surged by 4.92 per cent, and Som Distilleries & Breweries Ltd. gained 4.48 per cent.
Abneesh Roy, executive director of Nuvama Institutional Equities, said that this new policy is a major win for liquor companies. Shop owners can now expect a solid 20 per cent profit margin on sales, he said. Nuvama continues to recommend a ‘buy’ on both United Spirits and United Breweries,
forecasting significant market share gains for the larger players. Under the previous government, local brands were favored, with widespread irregularities plaguing the sector. This reform marks a fresh start. According to Karan Taurani, senior vice president-research analyst at Elara Capital, the new policy could boost alcohol sales volumes by 7-8per cent. “It’s comparable to Karnataka’s corporation-based market, with private retail control expected to deliver better margins than Telangana. Earnings could rise by over 8-10per cent,” he noted.
The new policy aims to enhance quality, quantity, and affordability in the liquor market. Notably, the price of a 180 ml bottle of select brands will be set at just Rs 99. Liquor shop hours will also be extended, with daily operations from 10 AM to 10 PM. In a premium move, 13 high-end liquor outlets will be established across the state, excluding Tirupati.
Licenses for these premium shops will be issued with a five-year tenure, requiring an application fee of Rs 1.5 million. License fees for retail outlets will vary between Rs 5 million and Rs 8.5 million, with premium outlets paying up to Rs 10 million.