United Breweries stock may give good returns in near term

During the pandemic people got accustomed to the taste of expensive wines and spirits due to an increase in home consumption. And now customers are willing to pay more for boutique premium brands emphasising quality over quantity for a unique experience. In fact, the fine dining culture has also created a huge demand for alcoholic beverages with increasing number of young people socialising in clubs, bars, restaurants and pubs. The prime reason for this has been rapid urbanisation, changing customer preferences, expanding middle class population and the rising disposable income. As per industry research reports , India is the world’s largest consumer of whiskey but the Indian alcohol market is expanding rapidly with vodka and wine growing at a faster pace. The Indian alcohol majorly consists of Indian made foreign liquor or IMFL, Indian made Indian liquor or IMIL, beer, wine and imported alcohol. There is no doubt that the drinking habits of the Indian consumer is changing fast reflecting in their increased exposure to foreign brands along with international travel. The market size of the Indian liquor industry is currently around Rs 5.4 lakh crore and is expected to double in the next ten years. IMFL is the type of alcohol which is domestically manufactured and includes drinks like rum, vodka, brandy, gin and whiskey. On the other hand, IMIL are regional drinks locally produced and consumed by the local population. For example, Feni is a very popular local drink of Goa manufactured from cashew or coconut. Similarly, Mahua is a local drink consumed in Odisha, Bengal, Jharkhand and Bihar. Liquor companies in the country are on a roll on expectation of higher sales and profits in the future. United Breweries Ltd is one such company which has shed its past baggage and problems and now poised for stupendous growth in the years to come. The stock has been consolidating on the bourses for the last few weeks and fund managers and technical chart pickers are expecting the United Breweries stock to break out from the current level of Rs 1500 in the near to medium term time frame. Investors can do their own due diligence before buying any stock and check with their financial advisors before any purchase.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.