Liquor to become expensive in UP from 1 April; Radico Khaitan, United Spirits shares gain

Liquor stocks Radico Khaitan Limited and United Breweries Limited gained on Tuesday as India's most populous state Uttar Pradesh revised its liquor excise policy. Alcohol is set to become expensive in the state from 1 April, 2023.

Radico Khaitan shares were trading at Rs 1,124.15 on the NSE and were up by Rs 25.05 or 2.28 per cent from the Monday closing price. Meanwhile, United Spirits shares were trading at Rs 1,577.25, higher by Rs 2.50 or 0.16  per cent.

Frontline Indices S&P BSE Sensex and NSE Nifty50 were trading in the red, though they shed their morning lows. While the latter was trading at 17,638.60, down by 10.35 points or 0.06 per cent the former was trading at 59,488.12, down by 12.29 points or nearly flat from the previous closing price. 

Under the new excise policy, licensing fee for shops and model shops has been raised by 10 per cent. The new rules also mandate 10 per cent increase in minimum guarantee quota.

On specific occasions, on prior approval of the government, the duration of sale of liquor could be increased. In the country liquor segment, prices have been hike by 12 per cent. 

According to channel checks done by the Zee Business, the prices of premium beer may go up by 10 per cent. In the previous year, the Uttar Pradesh government had raised the price of beer and spirits by 7-10 per cent.  

Many beer and spirit makers increased prices by 3-12 per cent in UP, West Bengal and Uttarakhand.

Volume Contribution

-- 10-12 per cent is accounted by - United Spirits and United Breweries

-- 40 per cent by Radico Khaitan 

The price of raw material is expected to go up and that may have an impact on the profit margins of the companies.