Allied Blenders gets new 'Buy' from JM Financial; 19% upside seen for stock

JM Financial noted Allied Blenders' rising presence in premium IMFL via its Maestro launches and improving profitability

JM Financial has initiated coverage on Allied Blenders & Distillers Ltd. with a 'Buy' rating and a March 2027 target price of ₹730 per share, implying an 18.7 per cent upside.

 

According to the brokerage, the brewery company has sharpened its focus on innovation and cost efficiencies over the past two years, supported by a strengthened professional management team and improved access to growth capital post its initial public offering. 

 

These efforts are beginning to yield results, JM Financial said, with the company delivering double-digit sales growth for five consecutive quarters, led by its ICONiQ White whisky, which contributes around 55 per cent of premium and above (P&A) volumes.

 

JM Financial highlighted Allied Blenders' expanding presence in the premium and luxury IMFL segment through the launch of eight brands under the ABD Maestro portfolio, along with an improvement in profitability.   ALSO READ | Tata Steel's expansion blueprint prompts diverging views from brokerages 

Gross margin and Ebitda margin rose to 43.8 per cent and 12.4 per cent, respectively, in the first half of FY26, compared with 37 per cent and 7.3 per cent in FY23. The company has also increased capital expenditure, with more than ₹500 crore planned over FY25-27 for backward integration.

 

A recovery in brands such as Officer's Choice Whisky and Sterling Reserve, scale-up of the Allied Blenders Maestro portfolio and a moderation in working-capital intensity will be key monitorables, the brokerage said. Allied Blenders has also started receiving long-pending dues from Telangana, and JM Financial expects a gradual normalisation from the FY25 peak, the note said. 

 

Upside risks include potential price hikes in Telangana and faster-than-expected momentum in the Allied Blenders Maestro portfolio, while downside risks stem from weaker execution in the P&A segment or adverse regulatory changes in key markets.

 

JM Financial noted that Allied Blenders P&A contribution to overall sales has risen 660 basis points to 53 per cent between FY23 and H1FY26, driven by the success of ICONiQ White. Volumes touched around 4.9 million cases in the first half of FY26, with continued month-on-month gains in both new and established markets.

 

Further gains from ongoing backwards-integration projects, the proposed India-UK free trade agreement and improving ICONiQ profitability are yet to play out, and could support brand investments as well as margin expansion over FY26-28, according to JM Financial.  ALSO READ | Lloyds Engineering Works rises 3% on incorporating new defence unit

Allied Blenders share price movement

The brewery company's stock rose as much as 1.78 per cent during the day to ₹625.5 per share, the biggest intraday rise since December 4 this year. The stock pared gains to trade 1.1 per cent higher at ₹621.7 apiece, compared to a 0.44 per cent advance in Nifty 50 as of 9:53 AM. 

 

The counter has risen 44 per cent this year, compared to a 10 per cent advance in the benchmark Nifty 50. Allied Blenders has a total market capitalisation of ₹17,396.57 crore.