Carlsberg to Go for an Indian IPO: Part Two

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Equity Analyst, LightStream Research

Farha Sabri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Thematic (Sector/Industry)

India Food, beverage and tobacco / Thematic (Sector/Industry)

<p>This is part one of a series of reports on the widely discussed Carlsberg India IPO. This is a collaborative report between <a href="https://www.smartkarma.com/profiles/1654" target="_blank" data-smartkarma-citation="accounts:1654">Gervin Gayan</a> and myself. In this report, we take a look at the regulatory landscape governing the Indian  beer market and the demand drivers which will propel market growth in coming years.</p><ul><li>India's laws and regulations for alcohol consumption are quite stringent with the industry being hard hit by the highway liquor ban, the GST implementation and most recently, rising taxes on beer in several key states.</li><li>Despite a decline in sales (in terms of volume) due to regulatory hurdles over the last couple of years, manufacturers are still optimistic about the market as changing demographics are starting to bode very well for sales.</li><li>This is mainly a result of the increasing number of affluent millennials with a thirst for premium beers, and the rising disposable income in India. Against this backdrop, Carlsberg's Tuborg brand is supposedly the second most favourite beer brand in India after Kingfisher.</li><li>Moreover, the beer price hike in Terangana should also bode well for the industry as it is one of the main beer consuming states in India.</li><li>As such, we expect the beer market to grow at a high single digit growth rate over 2018-22E. A Carlsberg IPO in India at a time like this would only help in strengthening the company's brand further in the Indian market.</li></ul>

This is part one of a series of reports on the widely discussed Carlsberg India IPO. This is a collaborative report between Gervin Gayan and myself. In this report, we take a look at the regulatory landscape governing the Indian  beer market and the demand drivers which will propel market growth in coming years.India's laws and regulations for alcohol consumption are quite stringent with the industry being hard hit by the highway liquor ban, the GST implementation and most recently, rising taxes on beer in several key states.Despite a decline in sales (in terms of volume) due to regulatory hurdles over the last couple of years, manufacturers are still optimistic about the market as changing demographics are starting to bode very well for sales.This is mainly a result of the increasing number of affluent millennials with a thirst for premium beers, and the rising disposable income in India. Against this backdrop, Carlsberg's Tuborg brand is supposedly the second most favourite beer brand in India after Kingfisher.Moreover, the beer price hike in Terangana should also bode well for the industry as it is one of the main beer consuming states in India.As such, we expect the beer market to grow at a high single digit growth rate over 2018-22E. A Carlsberg IPO in India at a time like this would only help in strengthening the company's brand further in the Indian market.

Carlsberg to Go for an Indian IPO: Part One