The current market price of Associated Alcohols & Breweries Ltd. is Rs 505.85.
The period given by the analyst is one year when the price of Associated Alcohols & Breweries Ltd. can achieve the defined goal.
Associated Alcohols & Breweries Ltd., incorporated in 1989, is a small cap company (with a market capitalization of Rs 912.46 Crore) operating in the Beverages – Alcoholics sector.
The main product / revenue segments of Associated Alcohols & Breweries Ltd. includes drinking alcohol, sale of services and other operating income for the year ending March 31, 2021.
For the quarter ended 30-06-2021, the company reported stand-alone total income of Rs 82.08 crore, down -36.69% from last quarter total income of Rs 129.64 crore and in 33.73% increase over last year same quarter total income of Rs 61.38 crore. The company reported after-tax net profit of Rs 10.15 Crore in the last quarter.
Justification of the investment
Given the compelling growth story, the brokerage believes the stock should be reassessed. It initiates a hedge on AABL with a PURCHASE for a target price of 870 INR (18x FY24E EPS, ~ 20% off from the current valuation of GSL) representing a 105% hike over the next 24 months from at INR 425 CMP. The market is currently ignoring the 1.8 million case multiplication of its own brands and the manufacturing outsourcing agreement with USL (for the latter’s popular brands in the state of MP). Management plans to double the sales of its own brands over the next 5 years. Additionally, the brokerage expects the deal making with USL to be strengthened to deepen the long-term relationship. All of these factors have the potential to generate value.
Promoter / FiI Holdings
The promoters held 58.4% of the company’s capital as of June 30, 2021, while the FII held 1%, the DII 0% and the public and others 40%.
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