Watchlist #1- Piccadily Agro
- Dec 20
- 3 min read
With Watchlist we pen down our broader thoughts on an idea that looks interesting and is worth keeping in one’s watchlist. This week’s idea is Piccadily Agro Industries.Piccadily operates in the alcobev space and is known for its award winning single malt whiskey- Indri.
Why Piccadily looks interesting?
Major pivot from poor B2B business to a high quality B2C branded business.
New business has very strong growth prospects due to the nature of business, a very strong anchor product and product portfolio expansion.
Large capacity expansion to support growth of new business.
Business Pivot
Originally a sugar and distillery business, Piccadily has been undergoing a major pivot over last few years from a commodity-B2B business to a B2C alcobev business (IMFL).
This pivot has brought all round improvement for the company in terms of growth, profitability and overall quality of business profile.
If company successfully scales up its alcobev business, then the profitability for the company can grow at non-linear pace given the huge margin differential vs other business segments. Sugar business is loss making (company is looking to dispose that), Other distillery business (ethanol, malts and country liquor) is mid-high teens margins while core alcobev business (IMFL- Indian Made Foreign Liquor) is high 30s margin business.
Large Growth Headroom in Alcobev
At ~Rs380 crores of gross revenues from Alcobev segment, Piccadily has a huge growth headroom. Any national level Alcobev company can easily have few thousand crores in gross revenues; especially with a product like Indri which has a very strong brand pull both- domestically & internationally.
Currently, ~80% of alcobev segment revenues comes from Indri and the company has a lot of scope for product portfolio expansion into additional categories which it has been doing in recent years with the launch of Camikara Rum and Cashmir Vodka; both of which have also received major accolades in their respective categories.
Large Capacity Expansion
Piccadily is investing in large capex of ~Rs1000 crores to expand capacities for its IMFL business which will nearly triple the overall capacity. The company did a fund raise last year at ~Rs750 levels (current price ~Rs560) to support this capex; fund raise also had participation from the promoter group.
Issues/Risks to Consider
A. Supply Challenges
Piccadily’s flagship product- Indri is a single malt whiskey and by definition to be called a single malt requires that the product is matured for atleast 3-years.
In case of Indri, the least aged version is ~6 years. And thus, production planning is very important in the business. Piccadily historically has had a very large malt maturation capacity, however it had been doing B2B sales of this malt; only in FY25 did it stop its B2B sales to cater to its internal requirement.
The issue here is that the growth in the alcobev segment seems to have slowed dramatically over last 3 quarters after few years of rapid scaleup; and supply side challenges seems to be the primary reason for it.
The new capex as & when it comes online will not add to supply immediately but only after few years post maturation of production at these new capacities.
But this is not totally a bad news for us as due to this slowdown we could see a good correction/consolidation in stock for sometime which could provide a good entry point here and thus makes Piccadily an interesting opportunity to keep track of and keep in one’s watchlist.
B. Promoter’s Past Issue
Piccadily’s promoter had been convicted of a murder. I will not discuss this aspect in detail here as how to discount such a thing varies substantially between investors; only wanted to have this info noted here.
In summary, Piccadily offers an investment setup wherein we have a big underlying pivot with massive potential in the medium-long term with some near term slowdown & challenges.
That’s all for this one; we’ll be back with a new idea next week. Meanwhile readers can access some of our more detailed research and resources here;
Shared Research 🔗- https://www.surgecapital.in/sharedresearch
Knowledge Base 🔗- https://www.surgecapital.in/knowledge-base