Add Tilaknagar Industries Ltd for the Target Rs.520 by Choice Institutional Equities
Key Conference Call Highlights
Imperial Blue Acquisition
* Q4FY26 marked the first full quarter of Imperial Blue operations under TLNGR ownership, with IB volumes reaching 4.6 Mn cases in this quarter
* ~75% of the IB business has exited the TSMA framework, with only three states remaining to transition by FY27-end
Volume Performance
* Combined volumes increased 134.7% YoY to 8.0 Mn cases in Q4FY26, supported by the first full quarter of IB consolidation
* Excluding IB, the legacy business delivered broadly stable performance; the management indicated ~5% secondary volume growth despite a high base in AP in Q4FY25
* IB (ex-Maha) recorded 9% YoY volume growth in this quarter
Margin and Synergies
* The management reiterated its medium-term EBITDA margin target of 16–18% for the combined business over the next 24–36 months
* Margin expansion is expected to be driven by packaging optimisation, bottling and supply-chain efficiency, lower TSMA cost and operating leverage from the larger scale business
* Benefits from a potential Telangana price hike and the India-UK FTA could provide incremental upside to profitability
Capacity Expansion and Operations
* Received approval to commence operations at the expanded Prag Distillery facility in Andhra Pradesh, increasing bottling capacity six-fold, from 0.6 Mn to 3.6 Mn cases annually
* The project is expected to generate annual bottling cost savings of ~INR 100 Mn while improving supply security in a key growth market
* TSMA-related expenses declined, from ~INR 220 Mn in Q3FY26 to ~INR 140 Mn per month in Q4FY26 and are likely to reduce further as additional states transition
Outlook
* The management maintained its guidance of high single-digit to low double-digit volume growth for FY27E, with double digit growth forecast in FY28E
* Revenue growth is anticipated to outpace volume growth through mix improvement and premiumisation initiatives by FY28E
* Net debt is projected to decline to ~INR 17 Bn by FY27-end, with the long-term target of reducing Net Debt/EBITDA below 1x by FY29E
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SEBI Registration no.: INZ 000160131
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