Buy Allied Blenders & Distillers Ltd for the Target Rs.690 by Choice Institutional Equities
Business Overview
ABDL, founded in 1988, is a leading player in the Indian-made Foreign Liquor (IMFL) market. Its flagship product, Officer’s Choice Whisky, launched in 1987, is the third best-selling whisky worldwide, with sales of 16.9 Mn cases in FY26 and a 40%+ market share. The company focuses on premiumisation, recently introducing its Rangeela Vodka, Yello Designer Whisky and Aodh Irish Whisky, so as to enhance its portfolio. On the operational side, ABDL is implementing backward integration, targeting 100% in-house production of Extra-neutral Alcohol (ENA) and malt.
What are ABDL’s plans to expand into the luxury AlcoBev market?
* ABD Maestro is building a premium-to-luxury portfolio across whisky, gin, vodka and rum through an asset-light “build, buy and partner” strategy
* Luxury portfolio strengthened through new launches such as The Collective 34YO Single Malt, Zoya Gin, Aodh Irish Whisky and Arthaus
* Focusing on travel retail, exports, premium on-trade and CSD channels to enhance brand visibility and accelerate scale-up of luxury brands
What does ABDL’s distribution network look like?
* Extensive pan-India distribution reach with 80,000+ retail touchpoints and access to over 90% of India’s liquor retail universe
* Strong manufacturing and bottling infrastructure comprising 2 distilleries, a PET bottle facility and 37 bottling units across the country
* Largest Indian spirits exporter by volume, with products available across 36 countries and expanding international distribution
How did Q4 results demonstrate ABDL’s ability to deliver on the multi-year margin-accretion roadmap?
* EBITDA margin expanded 179 bps YoY to 17.9%, driven by premiumisation, favourable input cost and early benefits from backward integration
* Gross margin improved 480 bps YoY, highlighting the impact of mix improvement and captive PET operations on profitability
* Management reiterated ~300 bps EBITDA margin expansion by FY28E, supported by ENA, malt and bottling integration projects currently under execution
Why invest in ABDL?
* Premiumisation-led growth engine, with Prestige & Above brands contributing an increasing share of volumes and revenues
* Clear margin expansion roadmap backed by backward integration, operating leverage and potential benefits from the India-UK FTA
* Strong brand portfolio and market leadership, anchored by Officer’s Choice and fast-growing ICONiQ White, alongside an emerging luxury portfolio
* Scalable growth platform with pan-India distribution, export expansion and disciplined capital allocation supporting long-term earnings growth
Valuation We, therefore, value ABDL at INR 690 using the DCF approach, while maintaining our “BUY” rating. Our TP implies a PE of 62.0x / 41.8x for FY27E / FY28E
Key Risks:Premium and luxury launches may scale up slower than expected, while delays in backward-integration projects could impact margin expansion.
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SEBI Registration no.: INZ 000160131
