Buy Allied Blenders and Distillers Ltd for the Target Rs. 690 by Choice Institutional Equities
Key Conference Call Highlights
Quarterly performance
* In FY26, consolidated EBITDA margin expanded by 158 bps to 13.8%, with record EBITDA of INR 5,418 Mn. Q4FY26 consolidated EBITDA margin expanded by 203 bps YoY to 16.8%
* The management expects FY27E EBITDA margin to remain at FY26 level, with some pressure in Q1/early Q2 from geopolitical factor, followed by support from UK FTA, Telangana price increases and capex benefits
Portfolio and segment updates
* Officer’s Choice maintains over 40% market share in its segment, with strength in Telangana, Madhya Pradesh, Andhra Pradesh and Rajasthan
* Sterling Reserve B7 has shown low single-digit growth after increased marketing activity helped arrest earlier decline
* ABD Maestro now has a differentiated super-premium and luxury portfolio across Whisky, Gin, Vodka and Rum
* ABD Maestro is targeting an annual revenue exceeding INR 1,000 Mn, supported by a structured three-year scale-up
* The company sees an opportunity in the Andhra Pradesh Mass Premium Brandy segment, which is a 12-Mn case market where ABDL previously had limited presence
Major strategic and financial developments
* The malt distillery project in Telangana is expected to be operational in H1FY27
* Phase 1 backward integration initiatives are expected to add around 300 bps to EBITDA margin by FY28E and Phase 2 projects are expected to add another 100 bps to EBITDA margin by FY29E
* Inventory days increased due to proactive Scotch buying and high net inventory value products from ABD Maestro because of rupee depreciation against the pound
Outlook
* Consolidated top-line growth is expected to be in the mid to high teens, driven by investment in ICONiQ
* The management expects the Prestige & Above segment to grow in high teens by FY28E
* In the next three years, the company aims for high-teens revenue growth, with P&A crossing 50% of total volume and 70–75% of total value
* EBITDA margin guidance for FY28E has been raised to 18% as compared with the earlier 17%, which will increase to over 20% in the next three years
* Margin headwinds include possible rising inflation, geopolitical uncertainty, incremental ESOP charges of around INR 50–60 Mn per quarter and continued brand investment
* The management projects geopolitical developments and warrelated disruption to affect input cost and selected export markets
For Detailed Report With Disclaimer Visit. https://choicebroking.in/disclaimer
SEBI Registration no.: INZ 000160131
