United Spirits, Radico, Allied Blenders Shares Slide up to 6% After Maharashtra Duty Shock

Liquor stocks like Radico Khaitan, Allied Blenders and Distillers, and United Spirits lost their fizz on June 11, tumbling up to 6% on the NSE after Maharashtra popped a higher excise duty on Indian-made foreign liquor, country spirits, and imported booze.

Under the new rates approved by the state government, the excise duty on Indian-made foreign liquor has been hiked by 50% to 4.5 times the production value from the present 3 times the production value. According to reports, this is the highest-ever increase in duty (in percentage terms) in Maharashtra since 2011. This increase in duty will lead to a likely 30-50% increase in the maximum retail price of Indian-made foreign liquor.

Radico Khaitan, which owns brands such as Rampur Indian Single Malt Whisky, Jaisalmer Indian Craft Gin and Magic Moments, fell as much as 3% on the NSE to its intraday low, while Allied Blenders and United Spirits fell 6% each to touch their respective intraday low. Allied Blenders owns brands such as Officer's Choice and Sterling Reserve, whereas United Spirits owns McDowell's No. 1, Royal Challenge, Signature, Antiquity, Bagpiper, and Black Dog, apart from distributing Johnnie Walker, VAT 69, among others.

This increase in liquor duty will have a notable effect on the liquor companies, given the size of liquor market in the state. According to reports, Maharashtra contributed to 10-12% of the total industry volume in the country.

The state accounts for 20-22% of United Spirits' overall sales, while 7-8% of Radico Khaitan’s sales, CNBC-TV18 cited analysts’ findings. The duty hike move could impact United Spirits' earnings per share by 6-8%, while that of Radico Khaitan is expected to be impacted by 2-3%, the report said.

Beyond the announcement of duty hike, United Spirits has been in the spotlight after reports suggested that the company plans to monetise its stake in IPL franchise Royal Challengers Bengaluru. However, the company on Tuesday clarified that it has no such plans.