Som Distilleries Shares: There was a huge fall in the shares of liquor manufacturing company Som Distilleries and Breweries on Wednesday 11 February. As soon as the market opened, investors started selling shares, due to which the stock fell by about 11.7 percent to Rs 84.85 in early trade. The biggest reason for this sharp decline was the company’s quarterly results, which were much weaker than market expectations.
Huge decline of 76% in profits
Som Distilleries Shares: The company’s net profit declined to Rs 4.6 crore in the December quarter, whereas it was Rs 19.2 crore in the same quarter last year. That means there was a decline of about 76 percent in profits on an annual basis. After the weak profit report came out, investors’ confidence wavered and profit-booking in stocks intensified.
Increased pressure on revenue and margin
Som Distilleries Shares: The company’s income also remained under pressure in this quarter. On year-on-year basis, revenue declined by 16.8 percent to Rs 250.5 crore, which was Rs 301.1 crore in the same period last year. The company’s margins were also impacted due to weak demand in the premium liquor and beer segment and rising costs.
45% decline in EBITDA, concern increased
A big decline was also recorded in operating profit i.e. EBITDA. It decreased from Rs 36.4 crore to Rs 19.9 crore, i.e. a decrease of about 45.4 percent. At the same time, EBITDA margin also fell to 7.9 percent, which was around 12 percent in the same quarter last year. This decline in margins is being considered a sign of concern for investors.
Share reached near 52 week low
After weak results, the stock fell to Rs 84.85 intraday, which is very close to its 52-week low of Rs 83.50. However, there was a slight recovery later in the day and the stock was seen trading around Rs 88 with a decline of about 8 percent.
Shares have fallen by 42% in six months
Som Distilleries Shares: If we talk about the last six months, the shares of Som Distilleries have fallen by about 42 percent. Due to such reasons, the confidence of investors has weakened, the effect of which is clearly visible on the shares.
What signals for investors?
According to experts, unless the company’s earnings and margins improve, the stock may remain under pressure. Investors are currently being advised to keep an eye on the company’s next results and management’s outlook.
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