Sula Vineyards, GM Breweries shares jump up to 18%. What's making their brew stronger?

Shares of Sula Vineyards and GM Breweries soared up to 18% on Tuesday, defying the broader sell-off in liquor stocks, as investors cheered Maharashtra’s latest liquor policy shake-up that spared beer and wine from a steep excise duty hike.

Sula, which had been under pressure in recent months, jumped as much as 13% to Rs 335.45 on the BSE, while GM Breweries surged 16%. Meanwhile, industry giants United Spirits and Allied Blenders dropped up to 7% in reaction to the policy shift.

The Maharashtra government raised the excise duty on Indian-made Foreign Liquor (IMFL) from three times to 4.5 times the declared manufacturing cost. But beer and wine were notably exempted from this hike, a move that sent investors rushing toward companies like Sula and GM Breweries, which stand to gain from their focus on those categories.


Also read | United Spirits, other liquor stocks slide up to 6% after Maharashtra hikes excise duties

GM Breweries, in particular, caught the market’s attention with expectations that it could benefit from the introduction of a new category: Maharashtra-made Liquor (MML). This grain-based spirit will be produced by local manufacturers, though it will require fresh registrations. GM, known for its strong country liquor portfolio, is expected to adapt quickly to this change.

In contrast, the policy dealt a blow to larger IMFL players, who are more exposed to the newly increased duty structure.

Reports said beer, which has a lower alcohol content, was excluded from the hike as its retail price in Maharashtra is already among the highest in the country. As for wine, the state reaffirmed its long-standing support for the industry, citing its economic linkages: a majority of India’s wineries and grape farmers are based in Maharashtra.

The new excise structure has shaken up sentiment across the liquor sector, sharply dividing the winners from the losers. And for now, wine and country liquor players appear to be raising their glasses.