Bottoms Up on Dalal Street: Why Monika Alcobev’s IPO Deserves a Closer Look
A high-proof story of imported spirits, shifting consumer tastes, and India’s booming premium liquor play.
ABOUT THE COMPANY:
Monika Alcobev, incorporated in 2015, is a leading player in the imported liquor segment, offering a diverse portfolio of premium & luxury alcoholic beverages. The company specialises in importing, sales, distribution, and marketing for luxury spirits, wines, and liqueurs throughout India and the Indian subcontinent, including travel retail duty-free shops. Apart from this, it also provides a complete supply chain solution for its customers through its robust distribution network. The company does not have any subsidiary, associate or joint venture entity.
The company holds exclusive selling rights to more than 70 renowned global brands for India and the Indian subcontinent countries and is also responsible for their strategic brand development and market expansion. The company offers a comprehensive operational framework to its partner brands, which includes management of the entire supply chain process, starting right from the process of importing the goods followed by sales as well as distribution across the target markets. Importantly, the company has total control over the pricing of products, along with strategic planning, brand development and marketing to ensure that each brand effectively reaches the target customers.
Within India, the company is present in 20 states via its distribution network. This allows them to cater to a diverse and expansive customer base, ensuring that premium alcoholic beverages are accessible in various markets across the country. Internationally, the company leverages its infrastructure to serve key Indian subcontinent markets, bringing world-class products to regions with rapidly growing demands for luxury spirits and wines.
The company operates six strategically located warehouses in the states of Maharashtra, Karnataka, Delhi and Haryana to support its extensive distribution network, with its master warehouse situated in Nhava-Sheva, Mumbai, Maharashtra. The location of the warehouses ensures efficient distribution across the region allowing them to meet customer demand in a timely manner. The company is asset light, meaning the fixed asset base is low as it does not undertake any manufacturing activities itself, while at the same time it fixates prices, distribution and market growth, thus it gets to enjoy the economics of a liquor business without the heavy costs of manufacturing!
PRODUCT PORTFOLIO:
Their product portfolio houses various types of liquors, from tequila, whiskey & rum to wines, brandy and cognac. With over 70 brands under their umbrella, they cater to all sorts of customers in the alcobev industry.
In Tequila, they have brands such as Jose Cuervo & 1800 Tequila, with prices ranging from Rs 3,300 to Rs 35,000. In the Whiskey category, they offer brands such as Bushmills, Tenjaku & Lucifer’s, all of which are global well-established names with prices ranging from Rs 2,000 to Rs 60,000 per bottle. Under Liqueurs, they have brands such as Cointreau & The Choya, with prices ranging from Rs 3,500 to Rs 44,500. Coming to Brandy & Cognac, they have brands such as St. Remy & Louis XIII, with prices ranging from Rs 2000 to Rs 5,00,000. They also have various other brands under Rum, Vodka, Gin & Wines, with names such as Belenkaya, Crystal Head, Viva El Ron, The Botanist, Hayman’s London, Outback Jack, Premius, Villa Sandi among others.
The important thing to notice is, for the brands listed below, they have exclusive selling rights in the Indian subcontinent. All of these brands are one of the leaders in their own category, with high-value product offerings as well.
INDUSTRY PRESENCE & GROWTH PROSPECTS:
The company is the top importer in the Rum segment, commanding a market share of 12.3%. They hold an impressive 19% market share in Tequila imports, holding a strong position amid growing demand for agave-based spirits. They also command a 7.5% market share in Liqueur imports. Their leadership in rum imports, coupled with significant contributions from tequila, liqueurs, and gin, highlights their role in shaping India’s growing demand for premium and diverse imported spirits. They company ranks 7th among the overall Bottled-in-Origin importers in India, following industry players such as Pernod Ricard, United Spirits, Brown-Forman, Bacardi, William Grant & Sons and Aspri Spirits. They are among the Top 2 in Tequila & Rum imports, while among the Top 5 in Liqueurs import, and among the Top 10 in Whiskey, Vodka, Brandy & Gin imports.
MARKET GROWTH: The Indian alcoholic beverage industry has been one of the fastest-growing markets in the world. With an expanding population and middle class, favourable demographics, rising disposable income levels, greater preference for premium food and drink experiences, and acceptance of alcoholic beverages in social circles, the market will continue to grow. Increased liquor consumption in rural areas is going to be another major reason for the growth in the market.
DEMAND DRIVERS: India’s high population growth rate is adding 13 million drinking-age adults every year out of which 3-5 million people approximately end up consuming alcohol in some form. With a growing number of people joining the workforce sooner than in the past, together with changing lifestyles and dismantling of social barriers to the consumption of alcohol is driving growth in the alcoholic beverage market in India. Greater social acceptance for drinking amongst women and in Tier II and Tier III towns is expected to open newer profitable consumer segments. The rapid increase in the urban population, a sizable middle-class population with rising disposable income, and a growing economy are driving the consumption of alcohol in India. These factors will also result in consumers choosing to upgrade to more quality offerings. Coupled with rising disposable incomes, urbanization, and evolving social attitudes toward alcohol consumption, the expanding legal drinking age population is set to be a key driver of growth in India's alco-beverage sector.
PREMIUMIZATION: Premiumisation is the most important aspect in each sub-segment of the Indian alco-beverage sector. The market has transitioned to being driven by value-led growth in the premium segment from a volume-led growth from the affordable segment. The trend of premiumisation is prevalent across the value chain including the launch of new products, branding of shelf space in retail outlets and rise in experiential events and company outreach to its customers through multiple marketing initiatives. The premium and luxury alcoholic beverage market in India is undergoing a transformative shift, with a growing demand for Bottled-in-Origin (BIO) imports alongside the steady expansion of Bottled-in-India (BII) offerings. Indian consumers are increasingly prioritizing authenticity, heritage, and geographical indications (GIs) that ensure quality and provenance.
GRADUAL SHIFT IN TASTES: Over the last five years, India has witnessed a gradual shift in consumption from brown to white spirits, especially among urban millennials and younger consumers. This trend is driven by growing interest in mixology, lighter flavour profiles, and the increasing popularity of cocktails made with gin, vodka, and tequila. Gin and tequila, in particular, have emerged as high-growth categories, supported by global brand awareness, lifestyle-driven consumption, and premiumization in the spirit’s space.
BUSINESS MOATS:
1) HIGH ENTRY BARRIERS:
The company operates in an industry with very high entry barriers, mainly in the form of regulations. The Indian alcoholic beverage industry is governed by a highly fragmented regulatory framework, with each state implementing distinct excise policies, licensing structures, and tax regulations. Unlike other industries, alcohol is regulated at the state level rather than centrally, leading to inconsistent policies across regions. The process of obtaining licenses for manufacturing, distribution, and retail is complex, bureaucratic, and cost intensive, often requiring substantial financial investment and prolonged approvals. This makes it very difficult for new entrants to quickly establish their presence in the market. Even well-placed companies such as Globus Spirits are only present in 7 states as a part of their strategy, highlighting the difficulty of establishing a nation-wide 20-state presence presence which Monika Alcobev has.
2) EXTENSIVE SALES & DISTRIBUTION SYSTEM:
The company also offers entire supply chain solutions for their customers. They have a sales team of over 100 people, and a well-established distribution network entrenched across major tier-1 as well as tier-2 cities. Replicating such a distribution across the entire nation, keeping in mind the regulatory challenges, is extremely tough and a time-consuming ordeal. Their long-standing partnerships with their dealers are also important given the shelf-space that they hold across customer touchpoints. They have more than 4500+ touchpoints through which they engage with their end-customers, as well as carry out marketing initiatives, which is no easy feat.
3) EXCLUSIVE SELLING RIGHTS:
One of their most important business features, is that they hold exclusive selling rights for over 70 global brands in India. Now this comes from strong relationship with manufacturers and the trust that they hold in Monika Alcobev to market and distribute their products in the Indian Subcontinent. This exclusivity is what makes them set apart, and is something which needs to be kept track of going forward as it is an important factor of their business. Among these brands, they have tied down the distribution of Jose Cuervo, a fan-favourite Tequila as well as 1800 Tequila, and these are one of the key drivers of their revenue.
4) PRICING AUTONOMY:
The company determines the pricing of their products based on various factors such as market demand, manufacturing costs, procurement costs, competitive pricing etc. They regularly review and adjust their pricing in accordance with prevailing market prices and market conditions, ensuring compliance with local regulations and tax structures. This approach allows us to remain competitive while adhering to the legal and regulatory requirements of each region. Pricing autonomy ensures that they can protect their margins in the face of regulatory adversity or competitive developments.
KEY RISKS:
1) REGULATION:
The alcohol industry is one of the, if not the most regulated industries in the country. While also being an entry barrier, it is a double-edged sword. Certain states, such as Gujarat, Bihar and Nagaland have enforced complete/partial prohibition for the sale of alcohol, which limits market potential. The exclusion of alcohol from the Goods and Services Tax (GST) regime results in varying excise duties and tax structures across states, increasing compliance burdens for new entrants and creating operational inefficiencies and can deter new brands from entering the Indian market itself in the first place. Any regulatory actions with respect to marketing of products can also hamper the company’s sales and directly affect revenue.
2) EXCLUSIVE SELLING RIGHTS:
Another key point which acts as a business moat as well as a risk is their exclusivity. Any potential modifications, renegotiations or even termination of these agreements can lead to adverse business effects. Such a loss of exclusivity could open the door for competitors to distribute the same products, leading to increased competition within their market segments and loss of revenue. It will also pose a differentiation problem given multiple distributors will sell the same product.
3) DEPENDENCE ON WHISKY & TEQUILA SALES:
As of 9MFY25, Whisky and Tequila together contributed for over 72% of their revenues. This number has grown from 58% in FY23 to 72% as of 9MFY25. The dependence on these 2 categories is a concentration risk for the business. Any adverse regulatory actions, changes in category-specific dynamics, changes in customer preferences are potential hazards for their revenue! There is need for diversification and this can be done by introducing newer, high-value products in their other segments.
4) SUPPLY DISRUPTIONS:
Since their business is of imports, any supply disruptions on the global scale, such as the Suez Canal issue, can cause significant delays to procurement of products as well as increase procurement costs. As they are not manufacturers of products themselves, any delays in procurement means they don’t have any product to sell! Efficient inventory management is key and should be tracked continuously, as it can also affect cashflows and profitability of the business.
5) HIGH RECEIVABLES:
The company has a very high % of receivables, with 56% of revenues being receivables as of 9MFY25. This hasn’t been a one-off phenomenon, and this high level of receivables has been a feature over the previous years as well. After speaking with the management, it has been clarified that higher receivables are owing to seasonality given that about 65% of the sales happen in H2, hence most of the receivables arise at this point and thus reflect on the full-year balance sheet number.
RELATED PARTY TRANSACTIONS:
The company has loan payables outstanding to the Chairman as well as the Managing Director. Now these balances have dwindled down over the last few years, which is encouraging, but there is a need to understand exactly what these loans were taken for, and how these balances will be going forward. While the numbers are not that large, it is still something which needs to understood properly from the management.
KEY MANAGEMENT PERSONNEL:
Mr. Bhimji Nanji Patel – Wholetime Director & Chairman: The founder of the company, and has been at the helm leading the company’s impressive growth in recent years. He founded Monika Enterprises, which initially was a wholesaling and distribution business for importer liquor, thought not on an exclusive basis, which then transformed into Monika Alcobev.
Mr. Kunal Patel – Managing Director: Son of Mr. Bhimji Patel, he joined the company in 2013, and it was his brainchild to make exclusive partnerships with established foreign brands and bring in Botted-in-Origin imports on an exclusive basis to the Indian subcontinent market, which is one of the biggest business moats of Monica Alcobev. Together with his father, they have more than 3 decades of experience in this industry.
Mr. Ashish Mandaliya – Chief Financial Officer: He has been associated with the company since Sept 2020. A qualified CA & CS, he has over 18 years of experience in the finance industry, and also has valuable listed-entity experiences with Sun Pharmaceuticals as Executive Accountant as well as being the CFO of VIP Clothing, where he was present for over 14 years in total. His experience will be key going forward with the listing of Monica Alcobev and all the compliances that come along with it.
Mr. Kalpesh Ramina – Company Secretary & Compliance Officer: A recent addition to their management team, he joined the company in February 2025. He is a qualified CS, and possesses over 5 years of experience in the field of secretarial compliance. Previously, he was the assistant CS at Leela Lace Holdings, the company which runs The Leela hotel, as well as being an assistant CS on a secondment basis at Mastek, another listed name.
Mr. Deepak Bajetha – Chief Logistics Officer: He has been associated with the company since June 2020. He has completed his MBA from CFAI, Sikkim and possesses over 14 years of experience in the field of logistics and operations. Previously, he was an EXIM manager at SSS Sai Shipping Pvt Ltd, where he gained valuable experience over 9 years. His role is crucial in the overall business of the firm since their procurement largely depends on their logistical framework.
Mr. Hemang Chandat – Chief Commercial Officer: He has been associated with Monika Alcobev for over 10 years, and has been a part of the growth story of the company. He possesses over 9 years of experience in the field of sales, marketing and strategy in the alcobev industry. He was the senior sales manager at Monika and then took over the role of CCO. He also plays a crucial role in the business given that their distribution and customer reach depend on their marketing strategies.
HISTORICAL FINANCIALS ANALYSIS:
Historically, the company has had steady gross margins, and EBITDA margins have ranged between 17% to 20%, with FY25 margins being at the higher end of that range, which can be seen to be driven by lower marketing expenses. On a PAT basis, they have had steady 9%-10% margins over the last 3 years. Revenue has grown at a CAGR of 30% over the last 2 years, while PAT has grown at a CAGR of 32%, which is quite impressive.
Employee expenses have grown substantially, indicating that the company is investing in its growth and has the team ready to cater to the needs of their customers. On the flipside, finance costs have steadily built as the revenue has grown, and this can be reflected from the higher working capital needs of the business as their inventory grows with newer brands and procurements to penetrate the Indian market. This is the nature of the business, and the IPO proceeds should ideally help with bringing down the working capital requirements this improving their profitability going forward to some extent as well as improving their cashflows. Their receivables % is very high at about 43% of revenues, and is something to be concerned about. This might be the nature of the business as well, and needs to be clarified from the management.
Return ratios are quite high, at 25%+ over the last 3 years for ROE and near 20% ROCEs. There seems to have been capital raises before the IPO as well, given the sudden increase in net worth unaligned to their profits. They have struggled to make free cash flows, which is a result of their high receivables and inventory investments, which is again the nature of the business. Naturally, this also results in negative free cash flow for the company.
Click here to get a snapshot of their historical financials (can’t fit it in this post)
THINGS TO GET FURTHER CLARITY ON:
1) Nature of exclusivity contracts and how long will they last.
2) Working capital position, and how it will develop going forward.
3) Related party transactions and why loans were taken by the company from their key management personnel.
4) Prospective diversification of portfolio given high dependence on whiskey and tequila.
IPO DETAILS & VALUATIONS:
The proceeds from the IPO will be utilised mainly to fund their working capital needs, and also to repay some of their outstanding borrowings. The table below highlights the exact amounts which will be utilised for their needs.
Coming to the valuations at which the company will list (see above), the median P/E of all the listed alcohol players is around 35x, while the median EV/EBITDA of these companies is around 18x. Keeping in mind that most of the players are manufacturers themselves, and that Monica does not have the fixed-cost baggage that these players have, yet has all the other business properties, I feel it is coming in at a discount to the industry average. Of course, they will have to do well to match their impressive historical return profile given the significant capital addition, but on a standalone IPO valuation basis, I personally think it is cheaper than its listed counterparts. Mind you, there is no apple-to-apple comparison for this business in the listed universe, so this in itself should drive some premium with respect to valuations of the business.
The numbers consider listing of the company at the upper price band of the IPO. As per their latest financials, they are doing an impressive ROE of 24%, although at current rates this will drop to around 11-12% post-IPO given the fund-raise which will come in. This will halve their return ratios, and they will have to do will to get back to their impressive return profile. Given their return ratios as well as impressive margins, the IPO is coming in at decent valuations according to me.
FINAL VIEW:
Funding their working capital needs through this IPO should help them to improve their return ratios as well as their cash flow position going forward. Being a working capital-intensive business with focus on receivables and inventory, the IPO should provide them with much needed funds to improve the overall business health as well as provide them with ammunition for furthering their growth and penetration in the markets.
They are coming in at decent valuations, though it’s not dirt-cheap valuation wise and thus not an instant value-buy, although it is a cheaper play valuation wise as compared to their listed alcohol industry counterparts.
The company itself is unique, and a very interesting proposition to have a play on the growing alcobev industry in India. There is no doubt that with growing disposable income, economic growth as well as the premiumization story of the alcobev industry, there is immense scope for the growth of this business going forward. The alcohol industry comes with its own regulatory shenanigans, and this should be considered while investing in related companies.
Given that the company already has a vast distribution network, there is always an option to start their own manufacturing, build their own brand and kick-in another growth lever if they wish to do so, and this is an option value which I see. Regulatory hurdles won’t be a burden for them as they are well entrenched in the industry and have significant know-how of how things work given their presence in 20 states. The market is quite competitive with respect to domestic liquors, but their distribution is their biggest strengths which few other companies have.
Hence, for my own personal view, I would definitely subscribe to this IPO.(Disclaimer: No recommendation, this is my own view, one should carry out their own judgements for the same)
So, what do you think of this company? Any thoughts / suggestions / views are most welcome, would love to hear different views! Thank you for reading along, and hope you found some value in this newsletter. Cheers!