Bihar sent shares in breweries and liquor firms down as much as 8% on Thursday after the country’s third-most populous state said it was considering a ban on alcohol, prompting concerns that others could follow.
Chief minister Nitish Kumar, who was re-elected this month after his anti-government alliance defeated Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP), told reporters the ban could come in effect from early next year.
Alcohol has been traditionally frowned upon in India for religious and cultural reasons, but a growing middle class has made the country a booming market for drinks makers, and only a handful of districts and states have an outright ban, including Gujarat, Modi’s home state. The southern state of Kerala is introducing limits on alcohol sales.
Shares of United Spirits settled at Rs 3,211.45 on BSE, down 4.74%. Radico Khaitan went down by 6.92% to close at Rs 114.25. While Pincon Spirit closed at Rs 101.75, down 2.02%, Som Distilleries at Rs 189.30, down 0.05%.
However, bunking the trend United Breweries went marginally up by 0.13% to close at Rs 958.65.
“More than the obvious financial impact, this is a directional negative if rest of the state governments emulate Bihar and Kerala, in our view,” analysts at brokerage house Motilal Oswal said.
Bihar has a population of around 100 million, more than Germany’s. The state earns a revenue of Rs 400 crore annually from liquor sale, PTI reported.
In the run-up to state elections, Kumar had reached out to women voters, who had led protests against rising alcohol consumption, promising them he would ban alcohol, if re-elected.
It was not immediately clear whether a possible ban would include all alcohol or be limited to homemade or country liquor.