With FY10 volumes likely to touch 100mn cases, management remains confident of achieving 12-13% volume growth over FY10-12 driven by favorable demographic trends and consumption patterns. Price hikes and mix improvement should add another 3-5% p.a. to value growth.
Diageo contract (c50% of W&M’s volume sales) coming to an end, management is evaluating various options of how to strategise the bulk scotch sales going forward. One of the options being considered is to conserve the bulk scotch and sell it as branded spirits later. While final decision is yet to be made on this, if this option is chosen it would imply lower sales and EBITDA for W&M in near term, though it would be strategically positive long term as share of high margin branded sales grows.
The company is expected to report an EPS of Rs 30 for FY 10 and Rs 48 for FY 11.
