Alcoholic Beverages Company Transformation | Associated Alcohol | Next Radico Khaitan?

Summary

The video script discusses three companies in the food and beverage industry, focusing on Associated Alcohol, a company with a troubled past but promising future under new leadership. The presenter emphasizes the importance of due diligence and shares insights on how to track market opportunities through insider trading and idea generation. The script highlights Associated Alcohol's strategic shifts, including geographical expansion and new product launches, and the potential for margin improvement as key investment considerations.

Takeaways

• 📈 The speaker is discussing the potential of three companies in the food and beverages industry, emphasizing that these are not stock recommendations but ideas for further research.
• 🚫 The company Associated Alcohol has had a troubled past, with issues related to demonetization, ED raids, and corporate governance concerns.
• 🔄 There is a change in leadership at Associated Alcohol, with the new generation showing intent to improve the company's operations and corporate governance.
• 📚 The speaker suggests reading books related to business and the market for insights, citing 'The Consolidators' as a source of ideas for SIS, OBO Reality, and Radico Khaitan.
• 🌐 The speaker mentions the importance of geographical expansion for Associated Alcohol, noting its growth from Madhya Pradesh to other states like Kerala.
• 🔑 The company is transitioning from a contract manufacturer to a brand owner, focusing on premium brands and higher-margin businesses.
• 📊 The IMFL (Indian Made Foreign Liquor) business segment, both licensed and proprietary, is growing at a healthy rate and has the potential for margin improvement.
• 🆕 Associated Alcohol is planning to launch five to six new brands, including gin, premium blended malt whiskey, and tequila, targeting trending segments in the market.
• 🔑 Insider trading and promoter activity are highlighted as a method for tracking potential investment opportunities, with Associated Alcohol being an example of this strategy.
• 🛑 The speaker stresses the importance of doing one's own due diligence and not relying solely on the information provided in the discussion.
• 📘 The speaker promotes a free course on their website, 'learn.scientificinvesting.in', which compiles their public work and analysis for educational purposes.

Q & A

What is the primary focus of the third company discussed in the transcript?

The primary focus of the third company is on beverages, specifically alcohol, and the company is named Associated Alcohol.

What is the speaker's stance on providing stock advice or recommendations in the transcript?

The speaker clarifies that the discussion is not meant to provide stock advice or recommendations, but rather to initiate ideas for further research.

What is the historical context mentioned for Associated Alcohol?

Associated Alcohol had a bad past, often associated with negative events such as demonetization, ED raids, and CBI raids, which affected its reputation.

What change in the company has caught the speaker's attention?

The change in leadership from one generation to another has caught the speaker's attention, as the new generation seems to show the right intent to improve the company's operations.

How does the speaker relate the story of Associated Alcohol to another company?

The speaker relates the story of Associated Alcohol to Radico Khaitan, another company in the beverages sector that was transformed by the second or third generation of entrepreneurs.

What book influenced the speaker's interest in certain companies?

The book 'The Consolidators' influenced the speaker's interest in companies like Sis, OBO Reality, and Radico Khaitan, which were taken over by second or third-generation entrepreneurs and turned around.

What is the speaker's view on the importance of reading business and market-related books?

The speaker emphasizes the importance of reading interesting books related to businesses and the market for gaining insights and generating investment ideas.

What are the two main business segments of Associated Alcohol that the speaker finds interesting?

The speaker finds the IMFL (Indian Made Foreign Liquor) licensed and proprietary segments interesting, as they are growing at a higher rate and have higher margin potential.

What is the speaker's view on the current margin of the IMFL business?

The speaker views the current margin of the IMFL business as being at the lower end, which could be a comfort for investors as it indicates potential for margin improvement and higher EPS growth.

What are the new brands that Associated Alcohol plans to launch according to the speaker?

Associated Alcohol plans to launch five or six new brands, including a Gin brand, a premium Blended malt whiskey brand, a premium ready-to-drink brand, a premium Brandy brand, and a Tequila brand.

How does the speaker track the market and generate investment ideas?

The speaker tracks the market through various methods, including insider trading data, where he noticed promoter buying in Associated Alcohol, which led to further investigation and interest in the company.

What is the speaker's expectation from Associated Alcohol in terms of growth?

The speaker expects Associated Alcohol to grow in terms of geographical expansion, new product launches, and margin improvement, which could potentially increase the stock's value.

What is the speaker's concern regarding corporate governance for Associated Alcohol?

The speaker's concern is to ensure that Associated Alcohol does not engage in any questionable corporate governance practices, and he will be tracking the company's actions to ensure positive signals continue.

What resource does the speaker offer for those interested in learning more about investing?

The speaker offers a free course on their website, learn.scientificinvesting.in, which collates all their public work, analysis, and educational content for interested individuals.