United Spirits, Radico Khaitan shares fall up to 5% after Maharashtra hikes IMFL excise duty

Shares of United Spirits Ltd. and Radico Khaitan Ltd. fell as much as 5% on Wednesday, June 11, after the Maharashtra government increased its duty on Indian Made Foreign Liquor (IMFL) by 50% - 60% on Tuesday.

This is the highest-ever increase in duty in percentage terms in Maharashtra since 2011. As a result of this increase in duty, the Maximum Retail Price (MRP) of IMFL is likely to increase between 30% and 50%.

Maharashtra contributed to 10% to 12% of the total industry volume in the country.

According to an analyst, Maharashtra accounts for 20% to 22% United Spirits' overall sales, while that figure for Radico Khaitan ranges between 7% and 8%.

The move could result in United Spirits' Earnings Per Share (EPS) getting impacted between 6% and 8%, while a 2% to 3% impact on Radico Khaitan's EPS could also be seen, according to the analyst.

The Maharashtra cabinet approved a series of measures

on Tuesday, June 10, aimed at increasing revenue from the State Excise Department. This is part of a broader initiative to address fiscal challenges while modernising departmental operations.

A high-level committee, tasked with identifying revenue-enhancing strategies, submitted its report recommending reforms in liquor production, licensing and tax collection.

The Maharashtra cabinet also sanctioned the establishment of an AI-powered integrated control room to monitor distilleries, liquor manufacturers, and wholesalers across Maharashtra, intending to enhance transparency and efficiency in the regulation of liquor trade.

The state government will also set up a new divisional office in Mumbai and its suburbs with superintendent offices in Thane, Pune, Nashik, Nagpur and Ahilyanagar, to strengthen oversight and enforcement, addressing issues such as smuggling and illicit liquor sale.

United Spirits was also in the spotlight on Tuesday as reports suggested it plans on monetising its stake in IPL franchise Royal Challengers Bengaluru, to which the company clarified that it has no such plans.

Shares of United Spirits ended the previous session 0.77% higher at ₹1,605 apiece. It has declined 3.3% this year, so far. Radico Khaitan shares ended the previous session unchanged at ₹2,650 apiece. The stock is up 2.6% this year, so far.

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