A day after the Madhya Pradesh Government announced plans to roll out phased prohibition in the State, most liquor company stocks posted a spirited show on the bourses.

In fact, shares of United Breweries stemmed a sustained fall and closed in the green with a marginal gain of 1 per cent at ₹751. Other gainers include Radico Khaitan and Pinco Spirit which were up 1 per cent each at ₹116 and ₹64, respectively.

However, United Spirits closed marginally in the red at ₹1,882, while Pioneer Distilleries and Empee Distilleries were down 9 per cent and 5 per cent, respectively, and GM Breweries fell 3 per cent at ₹416.

More than the companies owning premium liquor brands, standalone distilleries making Indian Made Foreign Liquor (IMFL) are likely to be impacted the most due to prohibition and the recent Supreme Court order to shut down all liquor shops within 500 metres of national highways.

Valued at ₹41,500 crore, the alcohol market is dominated by IMFL companies with a market share of 70 per cent with revenue of ₹29,500 crore and 50 per cent of volume.

The key markets for IMFL are Tamil Nadu, Karnataka, Andhra Pradesh, Telangana and Kerala. IMFL is largely made of molasses derived out of crushed sugar cane while foreign liquors use grains as starting ingredient.

Umesh Mehta, Head of Research, Samco Securities said the talk of prohibition by the State government is a political statement and is not practical given the kind of revenue they mint from liquor sale.

Liquor companies will be impacted only if the government bans manufacturing of liquor completely in India, he said.

Till then, he added, consumers will work their way out to overcome State government gimmicks on prohibition.

Madhya Pradesh collects ₹7,500 crore as revenue from liquor sales.

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