Buy AAB Ltd for the Target Rs.1,070 by Choice Institutional Equities
Key Conference Call Highlights
Strategic and Portfolio Initiatives
* AAB continues to prioritise premiumisation and scaling up of proprietary brands, targeting 25–30% growth in the IMFL proprietary business in the medium term
* The company commissioned a 6,000 KLPD malt facility, with malt maturation under way; the management plans to launch its own single malt whiskey within the next 18 months
* Premium brandy and tequila launches remain on track for H1FY27E
* Orange Central Province Vodka gained ~25% market share in Madhya Pradesh within six months of launch, highlighting improving traction in premium and flavoured categories
* The management reiterated its target of increasing proprietary IMFL contribution to ~50% of topline (ex.ethanol) in the next 3–5 years
Geographic Expansion and Capacity Enhanement Strategy
* AAB strengthened its presence across key markets including Madhya Pradesh, Kerala, Uttar Pradesh, Chhattisgarh and Maharashtra, while planning entry into Andhra Pradesh and Karnataka
* The company gained 1.5% market share in Kerala in FY26, reaching ~7.3% market share and becoming the third-largest private IMFL player in the state
* Acquisition of SDF Industries in Kerala for ~INR 308.5 Mn, along with planned modernisation capex of ~INR 100 Mn, is expected to improve bottling control, operational efficiency and regional scalability
Outlook
* The management guided for EBITDA margin of ~15%+ in FY27E, with higher marketing investments towards premium products, tequila and single malt launches
* AAB expects overall revenue growth of 10%+ in FY27E, while proprietary IMFL business is likely to remain the primary growth driver with targeted growth of 25–30%
* Ethanol business outlook remains dependent on improvement in industry utilisation and potential increase in blending targets, from 20% to 25%
For Detailed Report With Disclaimer Visit. https://choicebroking.in/disclaimer
SEBI Registration no.: INZ 000160131
