Shares of Globus Spirits surged 17 percent after the Ministry of Consumer Affairs, Food & Public Distribution, in a move to bolster ethanol production, slashed the price of rice supplied to ethanol distilleries. The cost has been reduced from Rs 28 per kg to Rs 22.50 per kg, Globus Spirits said in an exchange filing.
Shares of Globus Spirits were trading 16 percent higher at Rs 927. Among other liquor stocks, United Breweries gained 5 percent, United Spirits rose 3 percent, Radico Khaitan added 2 percent, and Som Distilleries edged up 0.8 percent.
The price reduction is expected to improve cost efficiency for distilleries. Since certain types of spirits are made from rice or its by-products, a lower rice price can reduce raw material costs, leading to decreased overall production expenses for companies like Globus Spirits.
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"This reinforces a positive outlook on grain-based ethanol, driven by the Food Corporation of India's (FCI) adjusted rice policy and substantial orders from oil marketing companies (OMCs). While FCI rice availability is beneficial, ethanol companies solely depend on FCI rice policy will have disastrous outcome, for their long-term sustainability," said InCred Equities in a report.
"The grain-based distillation business remains preferred, as it's expected to be the primary source of ethanol for fuel blending in Ethanol Supply Year (ESY) 2025," InCred added.
Established in 1992, Globus Spirits is engaged in the manufacture and sale of Indian Made Indian Liquor (IMIL), Indian Made Foreign Liquor (IMFL), bulk alcohol hand sanitisers, and franchise bottling.
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