Saturday 16 May 2015


About The Company & Business
Pincon Spirit Ltd (PSL) is headquartered in Kolkata, West Bengal.
The company incorporated in 1978 is promoted by Mr Manoranjan Roy who was recently awarded Outstanding Entrepreneurship Award for outstanding and exemplary achievements in Entrepreneurship from Enterprise Asia at the Asia Pacific Entrepreneurship Awards 2015.

PSL is in branded IMFL business. Product portfolio includes: Highland Blue Deluxe Whisky, XXX Rum, King's Coin Vodka, Pincon 9000 Beer. The company also deals in country spirit and edible oils.

The corporate office of the company is located in Bengaluru. The company is having its factories in Kolkata, 24 Paragnas and Agra (U.P).

PSL is listed on the BSE via direct listing norms and it has also submitted the application to list on NSE last month.

Kuntal Chatterjee is the COO of the company. Mr Chatterjee was a part of Allied Blenders & Distillers the makers of Officer's Choice which is a very successful brand. Mr Chatterjee has also held responsible position at Diageo.

The Ace Investor - Value Pick
  BSE: 538771
PSL is currently trading around 115 with a market cap of around 120 crores.
Total Debt is around 62 crores, 52 week high is around 200 and 52 week low is around 70.

PSL is having presence in the sates of West Bengal, Assam, Arunachal Pradesh, Jharkhand, Orissa, Sikkim, and Daman. The company is having its own brand in multiple states and is also having state specific brands.

 PSL is aggressively building a brand-business, Recently the company has started electronic media promotions for its Highland Blue Whisky via Music CD Ads in W. Bengal and it has also opened 7 liquor retail outlets at prime locations in Kolkata. The company has also announced plans to market its recently launched XXX Rum and Orange Gin via Music CDs.

PSL is going to invest INR 400 crores on expansion over next two years, While around INR 120 crores will be funded through internal accruals remaining will be via Bank Loan and Market Borrowing.

Currently, PSL is having IMFL production capacity of 1.2 million cases a year and it plans to increase it to 3 million cases over the next two years. PSL is going to launch its IMFL products in four high liquor consuming states of Tamil Nadu, Andhra, Telangana and Delhi in phases.

The company is also looking at alternative packaging strategy to boost its sales, It is investing 6-8 crores in its bottling plant in Rajarhat to introduce tetrapaks for some of its brands. Tetrapek offers an opportunity to retail less than the conventional 180ml bottles which increases sales for economical liquor companies as seen in state of Karnataka. PSL is also planning to invest Rs 50 crores to acquire some bottling plants, one being the country spirit bottling unit at Kharagpur with a capacity of 3 lakh bottles per day and another in Burdwan with a capacity of 2 lakh bottles per day.

Coming to the financials, PSL has grown really well in the recent times. Take a look at the results table below :-

till Dec14
Sales (Cr)
Net profit (Cr)

From sales of around 100 crores in FY11, PSL had grown to 380 crores+ sales in FY14 and now so far in the nine reported months of FY15 it has already reported topline of more than 420 crores and at end of FY15 it is expected to post sales of 575 crores and a net profit and eps of around 14. Looking at the growth and expansion plans it looks like PSL will meet its managements guidance of 1500 crores topline in FY18 and that will take the EPS to about 34.

 From sales of around 100 crores in FY11, PSL had grown to 380 crores+ sales in FY14 and now so far in the nine reported months of FY15 it has already reported topline of more than 420 crores and at end of FY15 it is expected to post sales of 575 crores and a net profit and eps of around 14. Looking at the growth and expansion plans it looks like PSL will meet its managements guidance of 1500 crores topline in FY18 and that will take the EPS to about 34.

On the valuations front, with FY15 EPS of about 14 at current price of 115 the P/E ratio comes at around 8.25. The industry average p/e of the sector is around 69.

PSL can be directly compared with brand-centric Som Distilleries & Breweries Ltd which is trading at a P/E 30 that too despite the fact that SOM has not been growing fast like PSL. Another company in this sector is Tilaknagar Industries (TIL) which was trading at a p/e of around 17 before it started reporting losses and inconsistent results. TIL too is actually not a high-growth company like Pincon so it cannot be a taken as a benchmark and other company called GM Breweries Ltd which is trading cheaply does not have any aggressive brand business and retailing its products cheaply with no brands to show.

Note: Regarding the promoter holding, Much like ITC the promoters have declassified themselves as non-promoters but see the shareholding pattern almost 30% is with Mr Roy and another 30% lies with board member owned companies and other Kolkata based groups. Which means about 60% of the equity is with people running the company.
All in All i feel, PSL is a great opportunity for long-term investors and looks set to be a multibagger. At 115 or even at 200 it looks a great potential multibagger stock to buy with eyes set on growth.
If we take a modest P/E of 20 then Pincon Spirit Ltd should be currently trading at around 280 and if we take the FY18 expectations of 1500 crore top-line then with EPS of around 34 at P/E of 20 the stock price should be 680. Remember high growth companies attract expensive P/E rating. NSE listing is imminent now and it is expected to trigger major re-rating in this stock.

Note: The above is not a research report but information as available on public domain and it should not be treated as a research report.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that i might have PINCON SPIRIT LTD in my portfolio and hence my point of view can be biased. Readers should consult their financial advisory before any investments.
  Name of the winners for Guess This Stock - 3 is posted below as "comment" on this post.


  1. There was huge response to Guess This Stock - 3 but mostly people guessed it wrong as Waterbase and SKM which are already recommended stocks.

    Over 600 answers were received again out of which only 17 were right.

    01 - S Iyer
    02 - Rajesh Patil
    03 - Vicky
    04 - Irfan Sayyed
    05 - Kunal Porwal
    06 - Adam
    07 - Nandu Tadepalli
    08 - Rahul Prasad
    09 - Ramesh Patel
    10 - Sachin Prabhakar
    11 - Manoj Agarwal
    12 - Amit
    13 - Clement D'Souza
    14 - Sushil Motilal
    15 - Dharmesh Badani
    16 - Praveen Goyal
    17 - Rajesh Algarsamy

  2. Worth investing....nice one bro keep it up... Do do short term intraday... Play it all the way..... Good luck all the winners

    1. Do not do short term and intraday.

    2. I meant that only sir...but typing error...

  3. why promoters holdings are nil showing in bse website? is it a fraud comany?

    1. Is ITC or HDFC fraud company? Check the note already wrote about promoter holding.

  4. sir, i am a newbie to stock market and am trying to learn.. why do you think such an awesome stock is trading at such low p/e?? could there be some other reasons we do not know.. whenever i see a stock with awesome financials but low p/e i get skeptical and think along the lines if there might be something seriously wrong that is not known to us.. i could be wrong too. pls share ur views..

    1. Theq reason is newly listed , was in t2t, not on institution preferred NSE (will soon be) and poorly informed people about the company and stock.. No one really knows this company.

  5. what do u think abt REC and powergrid ? please tell ur views

  6. Sir superb gem found..regarding promoter holding i see many nifty companies having promoters having themselves as non-promoters if we see it is true that people who run pincon hold more than 50%

  7. Superb pick.. And whats you view on Kellton Tech. company published 9 months of fins results.. One more qtr pending..?

    1. I think the bottom line is quite good.. looks like a good stock :)

  8. Important updates:

    1-A proposed merger of Pincon with Gomukh had got canceled long back.

    2-SEBI has not penalized Pincon ever nor has it defaulted any penalty, It was a broker who was penalized not Pincon.

    3-Here is the link for Nse listing:

    4- The promoter holding is not NIL actually as people running the company already hold significant stake (This has been clarified in the blog post already).

    5- March15 results are to be announced on May 21st.

    6- Company is in middle of earlier expansion and new expansion is also planned up in next two years.

  9. Dear Sir ,
    What is your view on MEGHMANI ORGANICS , i have 20000 qty @ 18.39 Rs.

    Thanks in advance ...................

  10. Hi Sir, This quarter , Their debt has increased from 62cr to 151 crs. This worries me now. Please let me know your views on this ?

  11. Sir...what are d risks associated with pincon?...One should know the dark sides along with bright sides of a company b4 investing it....We will remain grateful to you if you kindly publish dark sides too for your next all valu picks....Thanks for your valuable research. I am your blind fan .

    1. Risk is only the management's ability here..

      This can create huge wealth but it depends if management can manage success or not.

  12. Your view on Amines and Plasticisers?

  13. what is your view on Usher Agro? why it is traded at such low price in spite on growth?

  14. Sir, nice write up, trying to gather more information. Considering per capita alcohol consumption, sector can grow.
    Specific to Pincon, I think 40-50% of the revenue are from distributing/trading of other company products.
    Do we know the mix of rest? like IMFL,IMCL, and consumer products?
    Looks like Capacity expansion is intended to up the country liquor production, considering the regulation and political envoronment, is that a good decision?

    1. There is more than one facility expansion going on, Not only IMFL but also IMIL(Contry liqour) expansion going on... Looking at the political developments in west bengal i don't think it is a bad decision specifically because the company enjoys political support here.

      Coming back to the 40-50% revenue you have mentioned... About 70% of the company's revenue is by sale of IMFL and IMIL and the rest 30% is from trading other IMFL and IMCL products including their own Oil (FMCG) biz.

  15. Can one add to this at current price of 110. Holding from 125 rs. Aslo can you share the debt level. views on how they will be able to serve the debt level. Maybe you can check with the company during annual GM.

    1. They should be since the interest cost is quite low to them.

  16. The current debt is 62 cr. It will add another 280 cr debt. Total debt will be 342 cr. Any idea how much % debt do they plan to retire per year?

    1. First let them invest that much... Let the debt build... In stocks like these we have to monitor the progress and follow up with the company, If they improve their margins they will be doing quite well. thats the point.

  17. Hi sir, Can you update your views on the recent decision to increase share capital to 50 cr and raising of debt.

    1. Have been traveling, have not read about it.. will review once study it.

    2. Hello,

      As per my understanding, If share capital will increase to 50 cr. then total shares will be approx 5 cr (currently 1 cr).

      then the estimated FY18 EPS of about 34 will turn into EPS of approx 7 which means there won't be any return in term of EPS.

      Please correct me if i am missing some thing.

      Prateek Ingawale

    3. i talked to the CA he said capital increase will not happen in near future for at least 2-3 years.. So lets see, if things start turning bad will surely give a exit.

  18. ANUSHRI TEXTILES PRIVATE LIMITED sells 55322 shares of Pincon Spirit at Rs 101.57 per share on BSE on June 09.

  19. Pincon Spirit Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on June 11, 2015, inter alia, to discuss the following matter:

    1. Issue of Secured, Rated, Listed with BSE Limited, Non Convertible, Cumulative, Redeemable, Taxable Debentures, of Rs. 1000/- each for cash at par, aggregating up to Rs. 100 Crores, during the Financial Year 2015-16, to be issued through one or more tranches, that may be decided from time to time, and matters incidental thereto.

    2. Constitution of a committee of Board of Directors to take further decision on the matters related to the proposed issue of Debentures.

    3. Increase of borrowing power of the Board of Directors up to Rs. 500 Crores.

    4. Increase of Authorised Share Capital of the Company to Rs. 50 Crores.

  20. Hello sir, take a look at the recent happening. Ansuri text pvt sells 55k shares yesterday. they also sold some qty last week. pincon board meet..
    can you advise on the strategy of the board. why are they increase share capital and diluting eps also I fear they might pledge the shares to raise cash.

  21. this got shareholders nod to research and let your fans know what this now means

  22. Promotor Monoranjan Roy salary increased from 4.8 lac to 30 lacs from FY 13 to FY14. while profit has gone up by only 20%. Also, the IMFL segment has grown only by 8%, with FMCG business accounting for the remaining growth.

    While the profitability and return on capital are good, I doubt if they can grow at 20% rate going forward and also maintain profitability.