Liquor ban on highways: United Spirits, Radico Khaitan down over 5%

United Spirits, Radico Khaitan, Associated Alcohols and Globus Spirits were down up to 8% on BSE.

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Shares of breweries & distilleries companies such as United Spirits, Radico Khaitan, Associated Alcohols & Breweries and Globus Spirits have fallen by up to 8% on the BSE in otherwise strong market after the Supreme Court order banning sale of liquor along the national and state highways.

Liquor vends within 500 metres of national and state highways will have to shut down from Saturday, the Supreme Court on Friday said, exempting the hill states of Sikkim, Meghalaya and Himachal Pradesh and areas having population up to 20,000, the PTI report suggests. CLICK HERE TO READ FULL REPORT.

According analysts ban on liquor sales close to highways weighing on Q4FY17 alcohol industry sales, given destocking by retailers. Further, the demonetisation impact continues, albeit lower than in Q3FY17.

Among individual stocks, United Spirits, the largest liquor company in India with more than 50% market share, was down 6% to Rs 2,048 on BSE at 10:56 am, as compared to 0.47% rise in the S&P BSE Sensex. The stock slipped 8% to Rs 2,002 in intra-day trade so far.

“The Supreme Court ruling will impact all liquor companies as ~35-40% of liquor outlets (on average) are located along national or state highways and will have to shut shop and relocate from April 1, 2017 – this will essentially drive destocking in the near term and will impact volumes in 1QFY18 (may have also impacted 4QFY17 volumes a tad due to lack of clarity over this ruling to date),” point out Rohit Chordia and Anand Shah of Kotak Institutional Equities in a report.

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