Local Alcobev Industry To Grow At 8-10% In FY25, Margins To Expand: Report

The domestic alcohol beverages (alcobev) industry is expected to grow at 8-10% along with an improvement in margins, helped by a moderation of raw materials prices, a report said.

Indian-made foreign liquor (IMFL) companies are expected to witness 11-13% revenue expansion supported by a preference towards premium products amid volume growth of 3-5% on a high base of FY2024, the report by rating agency ICRA said.

The revenue of the beer companies will witness a 9-11% increase, helped by volume growth of 4-6%, the report said.

"ICRA expects beer to witness a good season in Q1 FY2025 in anticipation of a hot summer compared to the previous fiscal, which had encountered unseasonal rainfall," it said.

Moreover, ICRA expects working capital requirements for the sample set companies to moderate in FY2024 and FY2025. In addition to that the funding requirements would also be lower in the backdrop of lower input prices led by correction in packaging costs.

"ICRA estimates revenue growth of 8-10% for its sample set of domestic alcohol beverages (alcobev) companies in FY2025," it said.

The industry operating profit margin is also expected to expand by 50-100 bps in FY2025 due to moderation in input costs, primarily packaging materials such as glass bottles, it added.

However, it also added with the increase in minimum support price and higher procurement rates for recent crop arrivals, the cost is expected to remain elevated over the next few months.

"Diversion of grains towards ethanol could also keep prices firm and lead to costlier extra neutral alcohol. However, prices of barley, which is the key raw material for beer, are expected to continue to be fairly stable," it said.