February 25, 2022
Bira was started in the year 2015 with the first brewery in Belgium. Initially, they used to import the beer in India and sell it in the market. But today B9 Beverages Pvt., the owner of Indian craft-beer brand Bira 91, is currently holding 4 local breweries and will start the 5th brewery before the end of 2022. The 5th brewery will be opened up in the state of Madhya Pradesh whose initial capacity would be 4,00,000 Hectolitres.
In India, the Beer market is growing at a compounded rate of 10% in the last decade. As far as market share is concerned Bira currently holds ~5% of it. The beer market in India is dominated by Kingfisher which has a 50% market share followed by Carlsberg and Tuborg which has ~20-24% market share. However, in the last 5-6 years of the formation of Bira, it has captured the market share consistently and doing business very aggressively with its top-notch marketing campaigns.
If you see the revenue growth of Bira, it has grown multifold from just $45 Million in 2018 to $123 Million in 2022(E).
The lockdown imposed due to covid had impacted the sales and Bira Share Price in the unlisted market. Actually, most of the Bira sales come from Bars and Pubs, and both were closed during covid-19 restrictions. However, during this difficult time, they raised close to $100 Million from marquee investors such as Kirin Holding and others. Kirin Brewery Company, Limited is a Japanese integrated beverages company. It is a subsidiary of Kirin Holdings Company, Limited. It is the largest beer company in Japan. So, getting these kinds of marquee clients speaks volumes about the business prospect of Bira. The controversial king Mr. Ashneer Grover is also an early investor in Bira.
Bira Share price in the unlisted market had touched a high of 1100 before COVID-19. However, during covid-19, seeing the kind of impact it was supposed to come on Bira revenue, the Bira Share Price tanked. The Bira share price fell to 650-700 in the unlisted market because of the lockdown imposed by the government. At that time, there was hardly any demand for Bira Shares. Later on, as the economy opens up, businesses started to flourish, and with that, the Bira sales also started to increase. As per Bira management, they are expecting revenue of ~900 Crores in FY22 which is almost doubled from last year. And, they are also expecting to come in profit in the next 2-3 years and also planning for an IPO.
Currently, ~6 Crores shares are outstanding in the balance sheet of Bira, and Bira Share Price in the unlisted market is Rs.900. So, the valuation comes out to be ~5400 Crores. In the listed market, the Kingfisher brand owned by United Brewery is trading at Mcap/Sales of 7x. So, even if you give 5-6x Mcap/Sales to Bira Share Price, the fair value would be ~5000-6000 Crores.