Buy Associated Alcohols & Breweries Ltd For Target Rs.1,300 By Choice Broking Ltd
Malt Plant to Commence Production from September 2025: AAB is
setting up a malt plant, scheduled for commissioning in September 2025, as part of its strategy to launch its single malt Whisky. This initiative is a strategic step towards long-term value creation in Premium aged Spirits, strengthening domestic and export Premiumization momentum. The plant will also help AAB to become a fully-integrated player – extending its capabilities, from ENA production to in-house malt manufacturing – enhancing control over quality, costs and brand positioning.
Geographic Expansion Sustaining IMFL Growth Momentum: AAB is
expanding its geographic reach using region-specific premium launches, such as Hillfort and Nicobar in Maharashtra and Uttar Pradesh with the aim of capturing rise in premium demand. With the expected RTD launch in H2 FY26 and the upcoming Premium Brandy and Tequila launches in Q2–Q3 FY26, AAB is well-positioned to sustain strong IMFL growth.
View and Valuation AAB reported a sharp increase in margins, thus we revise our FY26E/FY27E EBITDA margins upwards by 29bps/26bps and revise our target price to INR 1,300 using the DCF approach; this implies an FY27E/FY28E PE of ~26x/24x. Accordingly, we maintain our ‘BUY’ rating with an upside of 21.4%.
Strong Quarter: Big Beat on Margins - Expanding by 275bps YoY
* Revenue for Q1FY26 was at INR 2.7Bn up 5.9 YoY and up 10% QoQ (vs CIE est. at INR 2.6Bn) driven by a 40.5% and 31% surge in IMFL Proprietary (IMFLP) sales and volume, respectively.
* This was driven by strong performance and consumer traction of the premium brands and expansion into new strategic markets.
* EBITDA for stood at INR 371Mn, up 32% YoY and up 4.6% QoQ (vs CIE est. at INR 294Mn). EBITDA margin was up 275 bps YoY and QoQ, to 13.9%.
* PAT for Q1FY26 was at INR 236Mn, up 33.5% YoY and 5.9% QoQ, respectively, (vs CIE est. at INR 168Mn).
Robust Growth In IMFL Portfolio: AAB‘s IMFLP. segment has shown tremendous performance, marking a 40.5% increase in the revenue, with a 31% jump in the volumes. We believe AAB’s evolving portfolio, anchored by IMFL and supported by ENA and country liquor, enhances earnings visibility and resilience.
For Detailed Report With Disclaimer Visit. https://choicebroking.in/disclaimer
SEBI Registration no.: INZ 000160131
