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Are Liquor Stocks a Smart Play to Make After the Budget?

Published 02-02-2021, 12:56 pm
Updated 02-02-2021, 12:58 pm
© Reuters.
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By Aditya Raghunath

Investing.com -- Alcohol is consumed when people go through two emotions: Joy and sadness. When there is a dip in the market (recession or downturn), consumers generally go in for cheaper alcohol. When the going is good, a lot of good quality liquor is consumed.

Finance Minister Nirmala Sitharaman added an agriculture infrastructure cess of 100% on alcohol but the hike was neutralized after she reduced basic customs duty to 50% from 150%. So what does this mean for alcohol stocks?

The first half of FY21 saw hard liquor sales drop 29% according to liquor apex body Confederation of Indian Alcoholic Beverage Companies (CIABC) in their half-yearly sales review. This was because the sale of liquor was banned during the lockdown and some states had imposed a Corona cess in May.

These stocks could be a good buy as the Budget seeks to provide a huge stimulus to the economy. Analysts say this Budget will propel India into the ‘Roaring 20s’. And as all of us know, the 1920s were characterized by copious amounts of alcohol. People will start consuming alcohol again.

As of now, most liquor stocks are trading flat. Radico Khaitan Ltd. (NS:RADC) is p 0.51%, United Spirits Ltd (NS:UNSP) is down 0.23%, G M Breweries Ltd (NS:GMBR) is down 0.57%, and Globus Spirits Ltd (NS:GLOS) is up 1.11%. Could this be a great time to start accumulating these stocks?

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