Maharashtra cabinet approves up to 60% liquor duty hike; United Spirits, Radico, Allied Blenders stocks under pressure

The Maharashtra cabinet has approved a sharp increase in excise duties on liquor, marking the biggest percentage-wise hike since 2011. The move is expected to push up retail prices significantly and may cause ripple effects across the alcoholic beverages industry.

As per the revised structure, excise duty on Indian Made Foreign Liquor (IMFL) has been raised by 50 to 60 per cent, while duty on country liquor has gone up from Rs. 180 to Rs. 205 per proof litre. However, beer and wine remain untouched, offering some stability in those categories.

The new excise duty structure will be rolled out in phases in the coming months.

In addition, a new category Maharashtra Made Liquor (MML) has been introduced to promote local manufacturing.

Here's how the new prices of the liquor brand will be:

Market Impact: Stocks React Differently

Brokerage firm Elara Securities projects a 30 to 50 per cent increase in IMFL retail prices, likely to hit volumes, especially in premium and luxury segments. United Spirits Ltd (USL) and Radico Khaitan are expected to be among the most affected, given their revenue exposure to Maharashtra.

However, companies focused on country liquor and beer/wine are expected to benefit from favourable pricing dynamics.

Here is a summary of how liquor stocks fared in the past one year:

What This Means for the Industry

1) Negative Outlook:

USL could see a 6 to 8 per cent drop in EPS due to its 20–22 per cent exposure to the Maharashtra market. Radico Khaitan may experience a 2 to 3 per cent EPS hit, with 7–8 per cent of sales coming from the state. Allied Blenders, heavily present in the IMFL segment, is also at risk.

2) Positive Outlook:

GM Breweries, SOM Distilleries, and other country liquor players may gain from improved margins. United Breweries and Sula Vineyards may benefit from stable pricing in beer and wine.

Policy Shift with Long-Term Implications

The launch of the Maharashtra Made Liquor category is aimed at boosting local manufacturing, which could reshape the competitive dynamics in the industry. Experts believe this move, combined with the duty hike, may lead to a strategic realignment in product pricing, regional branding, and volume growth.