Buy Tilaknagar Industries Ltd for the Target Rs.650 by Choice Broking Ltd
Robust Volume Growth with Portfolio Expansion: TLNGR delivered a strong Q2FY26 performance with volumes up 16.3% YoY to 3.4 Mn cases (+6.5% QoQ), driving net revenue of INR 3,982 Mn, a 6.2% YoY growth (9.3% adjusted for subsidy). TLNGR gained market share across key states and expanded its portfolio with the launch of Mansion House Whisky in Odisha, Telangana and Kerala, and Monarch Legacy Edition Brandy in select duty-free and southern markets. Additionally, Mansion House Whisky and Mansion House Lemon Flavoured Brandy won “Product Debut of the Year” awards in their respective categories at the “2025 Spiritz Conclave & Achievers” Awards.
View and Valuation
We revise our estimate to include Imperial Blue’s Net Revenues of INR 30.67 Bn. However, as per our channel checks, we lower our margin forecast from 15.6% to 11.3% on a consolidated basis for FY28E. Therefore, we continue to maintain that Net Income will expand by a CAGR of 19% over FY25–FY28E. Hence, we maintain our target price of INR 650 using the DCF approach. Our TP implies a FY27E/FY28E PE of ~62x / 42x.
Further Portfolio Expansion led by Samsara Gin and Amara Vodka
TLNGR increased its holding in Spaceman Spirits Labs (SSL) to 21.3% on a fully diluted basis. Deepening the usership agreement, Samsara Gin and Amara Vodka have been launched in Odisha and Puducherry markets. Further, these brands have also been introduced in international markets with Travel Retail exclusive 1 Liter bottles. SSL also launched a Ready-to-Drink (RTD), two new flavours and non-alcoholic mixers with Tonic Water and Sparkling Water. While SSL reported a loss INR 20 Mn for Q2FY26, the usership agreement is likely to enhance distribution capabilities.
Strong Volume: Robust Volume Growth, Margin Intact
* TLNGR’s volumes grew by 16.3% YoY to 3.4 Mn cases for Q2FY26 (+6.5% QoQ). NSR saw a de-growth of 4.7% YoY to INR 1,215; however, sequentially NSR improved by 6.5%.
* Net Revenues (ex-subsidy) increased by 9.3% YoY and 7.5% QoQ, since subsidies are accounted on a cash-basis.
* Gross margin declined by 255bps (ex-subsidy); however, EBITDA margin was maintained at ~15% as operational leverage kicked in.
* Consolidated PAT came in at INR 527 Mn (CIE estimates of INR 672 Mn), versus INR 885 Mn in Q1FY26, adjusting for subsidy in Q1FY26 Net Income grew by 10% YoY.
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