Pincon Spirit Limited: Can be a Multi-Bagger

Hello! Everybody,

I’ve been tracking Pincon Spirit for a long time and now I’m trying to pour it out everything I got all over the web.

PSL was established in 1978, headquartered in Kolkata, West Bengal.  It is promoted by Mr. Manoranjan Roy who was awarded Outstanding Entrepreneurship Award for outstanding and exemplary achievements in Entrepreneurship from Enterprise Asia at the Asia Pacific Entrepreneurship Awards 2015. So I think there are no remaining ends to doubt the management of the company.

It is the only company having its business line in 2 sectors:–

  • Alcoholic Beverages
  • Fast Moving Consumer Goods (FMCG).

It operates 4 divisions with their respective heads:

  • Indian Made Foreign Liquor (IMFL)
  • Indian Made Indian Liquor (IMIL) in Country Liquor Segment (C.S.Liquor)
  • Retail Chain of IMFL / IMIL Off & On Shops
  • Fast Moving Consumer Goods (FMCG) being Edible Oils of different types.

It is listed in both prime exchanges – BSE and NSE. BSE listing was executed on 14th November 2014 and NSE listing on 15th June 2016 (recent).

The company is aggressively making its brand. It had also planned to invest in Tetra-pack to curb adulteration as refilling is not possible in tampered packages.

This year company had announced a bonus share of 1:1 i.e. one equity share for every one held. The company had also started many online promotion channels like YouTube to build their company brand.

The company is doing its best to build 3 critical elements on which the enterprise risk management framework is build – creating a clear direct line of sight from risk management to investor’s value, implementing a process to protect investor’s value; and building the organizational capability to ensure strategic risk management.

You can access every information of their company on their investor’s relation page on their official website. ( Also, screener would be a great place to track information of company’s stats and announcements.

Pincon Spirit Limited: Can be a Multi-Bagger

A growth in alcohol industries is seen in India due to rising income level and changing drinking habits of Indians which even attracted many foreign breweries companies like United breweries to set-up plants in India.

South contributes 60% whereas North amounts to 30% of consumption in India. 10% is from rest other parts of India.

India’s annual per capita consumption of beer is 1 litre whereas in the US, it is 80 litres. Europe and China have 74 and 22 litres respectively.

The low consumption and the growth in consumption show great opportunities in the beer market. Some leading players in this sector are as follows:

  • United breweries
  • United Spirit
  • Radico Khaitan
  • GM breweries

However, Pincon is not able to get a place in top 5 breweries companies when segregated with the market cap but its tremendous growth shows that it is likely to top the list in coming 2-3 years.

Its sales and profit growth are just awesome:

Compounded Sales Growth:

  • 5 Year – 54.77%
  • 3 Year – 43.5%
  • TTM – 57.01%

Compounded Profit Growth:

  • 5 Year – 54.65%
  • 3 Year – 43.12%
  • TTM – 58.65%

And its Return on Equity (ROE) stood at 34.25%.

Sales of Pincon Spirit in the year ended 2010 stood at 55 crores whereas in 2016 it stood at 946 crores. It’s a 17 times growth in sales in 6 years.

Same as the Net profit of Pincon Spirit in the year ended 2010 stood at 1.42 crores whereas in 2016 it stood at 24.86 crores. It’s also a 17 times growth in profit in 6 years.

Company had outperformed the sector in 2015-16:

  • Revenues increased by 43% from H693 crore in 2014-15 to H988 crore.
  • EBITDA grew by 64% from H35 crore in 2014-15 to H58 crore.
  • Profit after tax increased by 53% from H17 crore in 2014-15 to H26 crore.
  • Acquired an IMIL bottling unit of National Industrial Corporation (Nicols) in Asansol.
  • Planned to acquire two more IMIL and one more IMFL blending and bottling unit in West Bengal coupled with two popular IMIL brands.
  • Decided to make a direct overseas investment to acquire 100% of OSPL (Orbitol Solutions Pte Ltd), a Singapore-based company that will enable Pincon to export its own brand of Ultra Force XXX Jamaican Rum to ASEAN countries. This will facilitate the import of liquor and pulses for onward marketing in India.
  • Penetrated deeper and enhanced acceptance of edible oils in West Bengal.

Recently, Pincon Spirit Ltd recorded a rise of 59.6% in its net profit at Rs.9.1 crore for the quarter ended June 30, 2016, as compared to Rs.5.7 crore for the quarter ended June 30, 2015. The company’s total income has increased by 33.7% at Rs.309 crore for the quarter against Rs.231 crore in the corresponding quarter of the previous year. (source)

However, the company is having a high debt to equity ratio of 2.8 and also having a quite low-interest coverage of 3.24 which could be a warning sign for retail investors but until and unless the company is reporting growth trend, there’s no worry.

Remember, debt element is helpful to increase the return to company’s shareholders as it carries fixed interest rate charges. However, a slight decrement in sales and profit will affect the shareholder in a negative way as the company still had to pay interest costs. Pincon Spirit is reporting a growth trend in profit and sales so we can ignore debt element in the capital structure to some extent.

Still, increasing input cost and high-regulated market are the major concerns for the industry.

Corporate Milestone

The company is giving a good year on year growth with many acquisitions and expansion plans. All the milestones since 2005 are highlighted as follows:


  • Acquisition of C.S. Liquor plants at [Dankuni] and at [Barahanagar], West Bengal along with the acquisition of two existing popular Brands of C.S. Liquor which is present “PSL Bengal Tiger” and “PSL Uddan”.
  • Achieving C.S. Liquor sales volume of 1 Crore bottles per month with C.S. Liquor production capacity of 2.50 Crores bottles per month for supporting the fast growing demand
  • PSL is set to be one of the largest players in cheap liquor segment in India.


  • Obtained permission from Excise Commissioner, West Bengal for setting up second own Manufacturing CS Liquor on PSL’s own industrial land in Belda, near Kharagpur.
  • Launched Pincon Ultra Force XXX Jamaican Rum and Ruby Gold Orange Flavour Gin.
  • Acquisition of C.S. Liquor Plant of Nation Industrial Corporation Limited (‘NICOLS’) at for catering especially to the C.S. Liquor market of the mining belt of West Bengal at Asansol and its adjoining areas.


  • Commenced South India and North India operations for Pincon Brand FMCG and IMFL products.
  • Obtained order from West Bengal Essential Supply Corporation Ltd., Govt. of West Bengal, for the supply of Mustard Oil through PDS.
  • Obtained permission from Govt. of West Bengal for manufacturing of Country Liquor and launched Pincon Bangla No. 1 in West Bengal.


  • Crossed Turnover of Rs. 300.00 Crores.
  • Launched Highland Blue Whisky.
  • Brand Registered with Odisha State Beverages Corporation & with Uttarakhand, Jharkhand Governments.
  • Obtained sole distributorship in West Bengal for FASHION VODKA, a premium Vodka Brand.


  • Crossed Turnover of Rs. 240.00 Crores.
  • Launched Ruby Gold XO Brandy.


  • Crossed Turnover of Rs. 106.00 Crores.
  • Launched Pincon King’s Coin 50˚ Rum, Pincon King’s Coin 50˚ Whisky and Pincon King’s Coin 50˚ Vodka in IMFL in the year 2010.


  • Trading & Distribution of IMFL Products.
  • Crossed Turnover of Rs. 50.00 Crores.
  • Pincon XXX Matured Rum is the third largest in Rum Segment as per the West Bengal Bonders & Manufacturers Association.


  • Significant acquisition of PSL (formerly SarangViniyog Ltd.) by PSLGroup.
  • Launched Pincon XXX Rum, Pincon No. 1 Whisky.
  • Largest Liquor distributor in the state of West Bengal. As per Business World Survey, Pincon Edible Oil has been adjudged as the Fourth Largest Consumer Pack for Edible Oil in Eastern India & has emerged as a popular Household name.

One of the major concerns investors are having with regards to Pincon is that it have 0% holding of promoter’s stake.

That’s not the problem. There are many companies like…. Who had declassified them as promoters.

However, they hold shares by way of FII & DII.

Like Monoranjan Roy, Chairman and Managing director of the company is holding 6,986,786 numbers of shares which are around 30% of company shares and 30% is retained by other management members. So overall the company’s 60% shares are held by the promoters of the company who had declassified them as promoters.

So it’s just the accounting method of showing 0% promoters but in reality, they are holding shares by another way.

Overall, I can see a bright future of Pincon Spirit. Currently, at 74 (dated 21 July) it looks as a great opportunity. High growth companies attract expensive PE ratings. Company’s current PE ratings are around 14 as compared to industry PE which is at 39.


Company is having a negative cash flow from operation? Does it mean that the company is loosing money in their core operation of the business?

Negative cash-flow is due to 2 reasons:

  • Inefficiency in operational activity
  • Company is growing

Later is the case with Pincon. It is now borrowing/issuing funds and putting it for operational activity.

I would like to add more from a discussion help on the forum – Valuepickr. (Link to the discussion)

One should try to understand the reason behind the negative cash flows.

Is it because the business is bad?

Is it because the accounts are manipulated?

Or is it because the growth Y-on-Y is such that they need to continuously pump in more and more money in working capital?

When you are planning to invest in a company, you always tend to invest with a 5 year horizon.

Do you see operating cash flows getting positive at the end of 5 years?

Yes, I do feel.

Over next 5 years the growth in the business will start tapering off.

Less working capital will be needed y-on-y.

Operating cash flows will automatically turn out to be positive.

I personally like companies generating negative operating cash flows if the reason is growth !!

Disclaimer: I’m holding 6% of my holdings in this stock so above analysis can be biased. You should invest with your own due diligence.

Source Links:

  • (Annual Report Year Ended 2016)


Pincon Spirit Ltd:

  • Signs Memorandum of Understanding
  • MoU for taking over Bacchus Enterprises in Ludhiana engaged in business of Indian made Indian liquor and Indian made foreign liquor

Source: Reuters

Image of the Company Notification to BSE, NSE and Calcutta stock exchange:

  • Ashok

    Will be tracking this stock from now on.. great analysis.

    There is no blog like yours.. Keep going..

    • How you manage to comment first.
      Great, stay in touch.

      • Ashok

        Keep visiting your blog 2-3 times a day, love reading you articles.

        Bought 200 shares for 83 rupees today. Good price you think?

  • No personal suggestion. The stock market is uncertain. The risk is always there in the market. So focus on overall portfolio returns. Individual stocks may go negative but always maintain an overall positive portfolio. So invest at your own risk.

  • Kiran

    Hey Sowmay, First, let me congratulate you for this wonderful blog. I happen to land here while I was going through the comments section on Safalniveshak blog :). Glad I read that comment.

    Thanks for this article and many more to come. 🙂


    • Hey Kiran,
      Glad I commented on Safalniveshak and thanks for your overwhelming response.
      Stay subscribe to get notified about new posts.

      • Uday

        Hi sowmay ,
        Came across your blog…..nice one….keep the good work going…

        Regarding pincon , even though i find it a very very attractive stock business wise but arnt you worried about the unethical management . If you happe to enquire in bengal , Mr roy is known for his unethical behavior and now also him n his operator goons are playing with stock price…..this drama has been goin on for a year now. I mean isn’t management integrity a top priority while picking stocks ?

        Your comments on this are most welcome n thanks in advance !

      • A.MOHAN

        Hi Sowmay Jain,

        Greetings! I accidentally came across your blog when I posted a query on Ashok Leyland’s diminishing performance in Google.

        You are awesome:)

        Last two days I have been reading your blog at random. I am a vivid reader and I would like to get aligned to your style and thoughts.. I will start posting my queries shortly.

        Do you also offer professional advice on one’s stocks & portfolio for a fee?



  • Kalyan Madicharla

    Sowmay, Your blog is fantastic! I’m an amateur investor and I gained a lot of knowledge regarding stock market through your blog, which otherwise would have taken some time. I regularly follow your blog. Keep going ! Please also consider writing an article with some stock recommendations for long term investing based on your analysis 🙂

  • Glad you liked it. Yeah! I’m working on an article about how? when? why? about long run investment with some bargain stocks. Soon will notify you through emails if you’re one of the subscribers.

    • Kalyan Madicharla

      Ofcourse I’m on of the subscribers 🙂

  • Suniel

    Any particular reason you think this company is better than Associated Alcohols & Breweries Ltd?

  • One thing panicking me about this company – there is a decline in sales in TTM year. And profit is also increasing at less rate than pincon. However, it has a good earning yield but overall is much better.

    • Suniel

      You mean overall Pincon is better or AABL?

  • Kiran

    Hey Sowmay

    Could you please create a forum or a section on your blog where the subscribed members would post a question regarding a stock and look forward for your valuable suggestions?

    Also, what is your opinion on Sanghvi Movers?


  • Sreenivas

    I am lucky to read this post today when pincon spirit is at 76.5, Going to grab some shares on coming Monday. Sowmay you are awesome man, excellent analysis.

  • Thanks, buddy. As I already said keep your portfolio diversified with 7-8 stocks. Nobody can predict when a bad news hit the company and its stock went down. Don’t aim for single stock returns instead for overall portfolio return.

    • Sreenivas

      Yes dude definitely. Currently my portfolio is flooded with more than 10 stocks. Creating confusion to myself sometimes. After reading your other posts I decided to refactor my portfolio as there are some junk stocks which need to be removed and make the whole list with maximum 8 good stocks. As you said limiting portfolio to 8 stocks sounds good.

  • Currently, I’m working on a FaceBook group. I’ll notify you in investing newsletter emails. Sanghvi motor is doing well since last 2 years. Before it was incurring losses. Well, 2 year positive performance is not enough to judge a company’s state. At least, a company should have five years positive financials.

  • Akshay Singh

    Hi Sowmay,

    Hope you are doing well.
    I am an avid reader of your blog.

    I just wanted to know why the promoters of these companies Pincon, HDFC, IDFC,ITC have declassified themselves as promoters ? and how it is good for the promoters? and what is wrong with being a promoter?

  • Sreenivas

    Sowmay, Can you write a blog on how to predict the time that we buy some stock at high price and within a few days profit booking starts which will end me up in buying at high. It may take 3-6 months to reach my buying price again.

  • Even I’m uncertain on short-term price fluctuations. However, If you’re investing for long then think for long, at least 3 to 5 years.

  • Sreenivas Doosa

    Hi Sowmay, I have been reading through the books you suggested in another post. They are really excellent books. I felt I know nothing in investment while going through them Thanks a ton for that. While going through it, I got a doubt regarding Pincon spirit current price which is around 6 times its book value. What do you think is this price cheap considering the business and future growth opportunities.

  • Don’t consider book value as a high parameter. Company with high PB ratio outperform like TCS and company with low PB ratio underperform like usher agro.
    And thanks for your appreciating comments for books. I had burned much of my money buying books so I know which books are worth reading and which are not. That’s why they are awesome.

  • Can you justify your point of “Mr. Roy is known for his unethical behavior” with some proper ground?
    He got an award for best manager in Asia. That alone is enough to show its relevancy.

  • I don’t provide any advice on individual stock suggestions. However, I had helped dozens of people auditing their stock portfolios (which stocks to hold, which to sell etc). If interested, contact through my email address –

  • Sarabjeet

    One thing that still confuses me is, if a company is growing and the net cash flow is negative then major contributor for this negativ value should be cash flow from investing. But why do we see negative number even for “cash flow from operations”

  • Hey Sarabjeet, all the negative CFO and CFI is absorbed by cash flow from financing. Borrowings and Equities are increasing. In fact, Debt to Equity ratio is a major concern right now. It’s more than 2.

  • Why not posting new updates?