Buy Tilaknagar Industries Ltd For Target Rs.680 by Choice Institutional Equities Ltd
With the purpose discussing the company’s progress and outlook, we interacted with the senior management team member Mr. Ameya Deshpande, Chief Strategy Officer:
* The Imperial Blue integration is expected to provide meaningful scale benefits, with Prag Distillery capacity already expanded to 3.6 Mn cases, supporting higher volumes and improving capacity utilisation
* 90% of transition is complete, except one state, which is still governed by the TSMA
* The company expects zero tax rate atleast till FY29E
* Under TLNGR's dedicated focus, IB has gained market share across most states
Operational Integration
* The IB acquisition was closed on November 30 and the company has already exited 90% of the Transition Services Management Agreement (TSMA)
* There is only one state still governed by TSMA (as of June’26) which is expected to end by March 2027
* The team size grew from 350 to 850 people, including 116 employees, who have transferred directly from Pernod Ricard
* The expansion of the Prag distillery has increased bottling capacity to 3.6 Mn cases per year
Financial Strategy and Debt
* The management expects net debt to drop from INR 19 Bn to ~ INR 17 Bn by the end of FY27E; further reducing to less than INR 10 Bn by FY29E
* The company expects a zero-tax rate until FY29E
Growth Drivers and Market Expansion
* Under TLNGR's dedicated focus, IB has gained market share across most states
* Tamil Nadu is a massive 65 Mn-case market, with Brandy being ~50 Mn cases market. Prestige & Above (P&A) is only ~10% of the industry
* The company is targeting a volume of ~50 Mn cases by FY29E
* This includes mid-teen volume growth and revenue growth which outpace volume by 300 basis points
* The potential India–UK FTA is expected to provide a 60 to 100 basispoint margin benefit starting in Q3, as it will lower the cost of imported Scotch used for blending
Strategic Investments and Luxury Portfolio
* Samsara's Q1FY27 volumes were 2.2 times higher than the corresponding quarter last year
* The partnership with Bartisans focuses on cocktail mixers, targeting high-end urban consumers through quick commerce and luxury retail channels
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