The Indian liquor market has been impacted by the government’s recent decision to reduce tariffs on US bourbon whiskies, making them cheaper in the country. This move has led to a dip in the stock prices of prominent liquor companies like United Breweries and United Spirits. Meanwhile, Zen Technologies has reported a notable profit growth in its Q3 financial results. Let’s dive into the details.
Bourbon Tariff Reduction: A Threat to Indian Liquor Companies? In a strategic move, the Indian government has slashed tariffs on US bourbon whiskies from 150% to 100%, making them more affordable in the Indian market. As a result, shares of major liquor companies like United Breweries and United Spirits fell by up to 2% in early trading. While the new customs duty still stands at a steep 100% (50% basic duty and 50% additional levy), it is a significant reduction from the earlier 150% tariff, potentially opening up the Indian market to more bourbon imports.
This shift could threaten the market share of domestic liquor producers, who face stiff competition from these imported brands. Indian liquor companies may need to adjust their strategies to retain customer loyalty and remain competitive.
Zen Technologies’ Q3 Report: Mixed Signals Zen Technologies posted a net profit of Rs 38.62 crore for Q3, marking a 22% increase compared to Rs 31.67 crore in the same period last year. The growth in profit was primarily driven by higher other income. However, the company faced a decline in sequential profit, with Q3 net profit almost halving from Rs 65.24 crore in the previous quarter.
The company’s revenue showed a similar trend, surging by 44% year-on-year to Rs 141.52 crore, but down 41% from Rs 241.69 crore in Q2. This reflects a significant slowdown in business activities during the quarter.
Despite these fluctuations, Zen Technologies showed resilience with a slight improvement in its EBITDA margin, rising to 35.90% from 35.12% in Q2. However, the margin remained lower compared to 47.34% in Q3 of the previous year.
Zen Technologies’ Optimistic Outlook Ashok Atluri, the Chairman and Managing Director of Zen Technologies, expressed confidence in achieving the company’s profitability targets. Zen Technologies aims for an EBITDA margin of 35% and a PAT margin of 25% by the end of the financial year, despite the challenges faced in Q3.
Conclusion: The reduction in bourbon tariffs poses a significant challenge for Indian liquor companies, with foreign imports likely to take a larger slice of the market. Meanwhile, Zen Technologies continues to show growth in profits and remains optimistic about meeting its financial goals for the year. The company’s ability to navigate the evolving market dynamics will be crucial for its sustained success
