Add Tilaknagar Indstries Ltd For Target Rs. 520 by Choice Institutional Equities Ltd
IB Integration Near Completion; Margin Recovery Expected
Q1FY27 volumes remained resilient despite temporary disruption from Transition Manufacturing and Services Agreement (TSMA) exits across Odisha, Punjab, Uttarakhand and Karnataka, along with state elections in Assam and West Bengal. Imperial Blue (IB) volumes grew 18% QoQ and gained ~150 bps QoQ market share, while Mansion House Brandy (MHB) volumes crossed 2.6 Mn cases (+7% YoY). EBITDA margin moderated to 14.5% (ex-subsidy) due to higher packaging cost, particularly glass, although stable ENA prices partly offset the inflationary impact. With ~90% of IB operations transitioned out of TSMA and only one state pending, we expect lower transition-related cost, supported by manufacturing and supply chain efficiency, to drive margin recovery in the next few quarters. Additionally, Karnataka's favourable excise reforms and benefits from the India-UK FTA are likely to support demand and profitability from H2FY27E.
View and Valuation
We revise our forecast upwards marginally for both, FY27E and FY28E, as we account for higher volumes from Imperial Blue and new launches expected in the next few years. We now bake in Revenue / EBITDA / Adj. PAT CAGR of 34.5% / 32.6% / 24.9% over FY26–FY29E, respectively. We maintain our TP of INR 520 using the DCF approach, which implies a PE of 38x on FY28E FD EPS of INR 13.8. Given an upside of 16.4%, we assign ‘ADD’ rating to the stock.
Quarterly Net Revenue Crosses INR 10 Bn
* TLNGR’s volumes (ex-Imperial Blue) increased by 2.8% YoY to 3.3 Mn cases. Imperial Blue volumes came in at 5.4 Mn cases for Q1FY27. NSR for the combined business improved 5.3% YoY to INR 1,183
* Net revenue stood at INR 10,460 Mn (in line with CIE estimate); in this quarter, TLNGR received a subsidy of INR 205 Mn
* EBITDA came in line with CIE est. at INR 1,689 Mn (vs. CIE Est. of INR 1,703 Mn). However, margin declined by 13 bps QoQ, coming in at 16.1%. This was primarily driven by impact of inflationary pressure across packaging inputs
* TLNGR reported a profit of INR 315 Mn. Adjusting for exceptional expenses, PAT came in at INR 616 Mn (INR 411 Mn ex-subsidy) in Q1FY27
Strengthening Premium Portfolio & Distribution
TLNGR continued to strengthen its premium portfolio by expanding the core brands into West Bengal, taking its presence to eight markets. Spaceman Spirits Lab reported 2.2x YoY volume growth, while the company launched Picante RTD. TLNGR increased its stake in Bartisans to 41.5%. We believe TLNGR is well-positioned to leverage its expanded distribution network for expanding the reach of its premium and luxury portfolio into untapped markets.
For Detailed Report With Disclaimer Visit. https://choicebroking.in/disclaimer
SEBI Registration no.: INZ 000160131
