United Spirits Limited

Want to become a millionaire? All you need to do is to invest a billion dollars in the airline industry. To complicate it further fund the investment by taking a lot of debt. This is what Vijay Mallya did when he started Kingfisher Airlines in 2003. What is the result? Click here to read the rest.


15 thoughts on “United Spirits Limited

  1. Hey Jena An excellent well researched writeup as always, but a quite obvious point made against investing in Spirit companies is the trend of State govts banning them in their states to impress upon women voters which is a massive 50% electorate.

    A very big market Bihar has already banned.
    Going by murmurs seems big states like UP,TN & going forward Punjab considering it.
    What will be your thoughts if this turns into reality.

    • Saurabh,

      Thanks. Given that excise duty on alcohol is a big revenue source for the state it’s hard to ban them forever. Let’s see how the story unfolds.


  2. excellent article once again…………thank u ………………ur view on the business as states are prohibiting alcohol which are going to elections this year and probably next year?

    • Thanks. Given that excise duty on alcohol is a big revenue source for the state it’s hard to ban them forever. Let’s see how the story unfolds.


  3. As always an amazing read…

    Though I admire your work, you make me always feel investing is not for amateur’s (which is very true)….but discourages people like me who can’t resist from investing in equity knowing nothing…… 🙂

    Without knowing most of the contents in the above post I am a share holder of USL …….this post really helps….

    Thanks a lot for your work…..always blown off by the amount of work you put before you post something….which refrains me asking you to writ more posts….

    • Sarath,

      Thanks. In the game of investing it’s better to have the mindset of an amateur and keep learning every day.


  4. Hi Jana

    As always, it’s a great post read. Maybe once the states bans the price may go down that could be best time to buy the stock :-).

    We have seen in history during US banning alcohol create mafia in turn we got great movies out of those real stories 😉 ( God Father ) Then US realized the mistake and left the ban on the alcohol. History can repeat – as states do for couple of years then they realize the impact of it to lift the ban.

    We have seen this AP state during 80’s – 90’s.


    • Thanks Hari. Things should play out ok after the elections. State government have their own incentives in the form of excise duty.


  5. Hi Jana,

    Excellent write-up as always. Whom you see as biggest beneficary of USL less focussed apporach to popular low margin market ? The field there is also not looking very competitive and might throw up some interesting oppurtunities.

    • Vishal,

      It’s tough to make money in popular segment. State government is coming up with their own brands like ‘Jai Jawan Rum’ in Kerala.


  6. Hi Jana, Thanx for the great work…Good going.
    1. Whether the incentive the state govts have NOT TO BAN alcohol works well or not but the doubt of such knife hanging on it always…will it not impact the market sentiment?
    2. Given the pro-development govts coming in to power these days…will they not take serious decisions as Gujarat did it, that, Banning alcohol for very long time even though encourages black market…still it will really help in reducing the number of growing kids (Upcoming youth) not to get addicted/introduced to alcohol, so easily as they will have very less access vis a vis if there is no ban.
    3. On an overall basis as Tobacco and Carbonated beverages…this sector as well is of net net harm to the society..than of any use….Good govts should be discouraging this sector as a whole…So having Govt as a head wind…can the business flourish….

    Given this scenario..will the estimation of future cash flows be possible.?

    • Thanks for your excellent questions. State Government ban and the other points mentioned by you is like Sword of Damocles and there is no 100 percent certainty that things will go in favor of USL.


  7. Excellent article Jana. The thorough work yet explained in a simplified manner, its a treat to read your articles. How do you think Radico Khaitan, which is also focussing on premium segment and less focuseed on popular segment, will fare – given the fact that premium has better margins and better aspirational demand?

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