Associated Alcohols & Breweries Ltd - Fundamentals & Technicals

Associated Alcohols & Breweries Ltd is in business of manufacturing and trading of ENA, Indian Made Indian Liquor (Country Liquor), Indian Made Foreign Liquor and Hand sanitizer. It operates through Potable Alcohol segment.

> It is a micro-cap company with a market cap of just Rs .822 Cr . Think like the company have just started crawling after coming out of mother’s lap.
> The ROCE is at 34% and ROE is at 26% which is very very impressive considering the size of the company. Positive.
> Stock P/E is at 14.2 which makes the valuation too attractive as compared to the sector P/E at 36.41. Positive.
> Higher than Industry Revenue Growth: Over the last 5 years, revenue has grown at a yearly rate of 11.69%, vs industry avg of 3.05%. Positive.
> Increasing Market Share: Over the last 5 years, market share increased from 1.29% to 2.12%. Positive.
> Lower than Industry Debt to Equity Ratio: Over the last 5 years, debt to equity ratio has been 24.6%, vs industry avg of 91.03%. Positive.
> Higher than Industry Current Ratio: Over the last 5 years, current ratio has been 147.51%, vs industry avg of 102.59%. Positive.
> It is almost a debt free company, reducing its borrowings continuously on year on year (YOY) basis, that's a very good sign from investment perspective.
> Very robust Topline and Bottomline.
> It is increasing its cash reserve on YOY basis, currently have huge cash reserve as compared to its borrowings.
> The company has maintained its Operating Profit Margin (OPM) at or above 18% since last 5 years, that's again a positive sign.
> The company expands its alcohol manufacturing capacity; the plant will have dual features of both ENA & ethanol manufacturing. The estimated cost is about 110 crores and expected to be complete by June 2022.
> Popular Brands: McDowell’s’, White Mischief, Director’s Special, Bagpiper, Black Dog, VAT 69, Black & White Scotch Whiskey, Smirnoff & Captain Morgan

> Stock looking very strong on chart, it is making higher highs and higher lows continuously since March 2020.
> Trading above 100 DMA and about to break 200 DMA.
> It is clear from volume at the bottom that accumulation is going on in the company on regular intervals and bull run will continue for long.

Fresh Buy - At CMP i.e. 455.
Old Buy - HOLD
First Target – 773 (+70%)
Second Target – 1092 (+140%)

Risk Management Tip: Never invest more than 5% of your capital in any single stock.

Happy Investing!
Team ShareMktSchool


Good analysis.....have been holding this for last 6 months...
Good investment pick for 2 yrs
+2 Reply
@AmitDaga, Glad that you liked it!
Even we have this one in our portfolio.
HI - what is the timeframe we are looking at ?
@mihir2021, 12-18 months for the final target.