JM Financial starts coverage on Tilaknagar Ind with 'Buy', sees 25% upside

Brokerage JM Financial has initiated coverage on Tilaknagar Industries with a Buy rating and a target price of ₹550, implying around 25 per cent upside from the current market price.  

The valuation is based on 35x FY28E, about 30 per cent discount to peer multiples due to lower margins, RoIC, and higher debt, with the Mar’27E target implying roughly 20x FY28E Ebitda on the consolidated business. 

JM Financial, in its report, highlighted that TIL is among the top five spirits players in India, with a leadership position in the brandy segment driven by its flagship brand Mansion House. The recent acquisition of Imperial Blue, the brokerage said, is a strategic move that transforms TIL’s portfolio, expands its total addressable market (TAM), and provides a strong foothold in the largest segment of the Indian Made Foreign Liquor (IMFL) industry—whisky—where Imperial Blue ranks as the second-/third-largest brand in the lower prestige and overall IMFL segment. 

 

On volumes, the brokerage expects the legacy business to see steady growth, with around 11 per cent volume CAGR over FY26–28E, and recovery in Imperial Blue led by increased focus, higher brand spends, and scale-up in under-indexed markets. 

“We estimate combined volume growth (LTL) of circa 8–9 per cent over FY27E/28E with Ebitda margins of 12.5–12.8 per cent in FY26E, and room for about 150 basis points of expansion over FY26–28E, supported by synergy benefits and operating leverage. Given limited capex requirements, we expect the company to generate robust free cash flow of ₹440 crore/₹580 crore in FY27E/28E,” the brokerage said.  READ | Eternal well placed to 'emerge stronger'; JM Fin sees 80% stock upside

Meanwhile, here are the key drivers behind JM Financial’s bullish call on Tilaknagar Industries:

Stable legacy business

JM Financial notes that TIL has rebounded from historical debt challenges to a robust operating and financial position. Sales clocked a 15–16 per cent CAGR over FY20–25, Ebitda margins have turned positive, and the balance sheet strengthened, returning to net cash in FY25. The legacy business is expected to deliver a 13 per cent sales CAGR and 11 per cent volume CAGR over FY26–28E, supported by best-in-class gross margins.

Imperial Blue acquisition transforms portfolio

Per the brokerage, TIL’s acquisition of Imperial Blue in November 2025 expands its TAM, reinforces its presence in the whisky segment, and increases whisky’s share in the portfolio from less than 10 per cent to 67 per cent. Alongside investments in Spaceman Spirits, TIL now ranks as one of India’s top five spirit houses, with improved regional diversification and a clear pathway to premiumisation.

Volume growth potential

JM Financial expects Imperial Blue volumes to recover under TIL’s stewardship, driven by stepped-up brand investments, geographic expansion into key states including Kerala, Karnataka, Uttar Pradesh and Delhi, and focused premiumisation efforts. The brokerage forecasts 6–8 per cent volume growth for Imperial Blue and an overall 8.5 per cent combined volume CAGR over FY26–28E.  READ | Motilal Oswal remains structurally positive on Hindalco; raises target

Margin expansion

JM Financial projects that TIL’s mid-teen margins and Imperial Blue’s low-double-digit margins will yield a combined Ebitda margin of 12.5–12.8 per cent in FY26E. Synergies and operating leverage, the brokerage believes, could expand margins by around 150 basis points over FY26–28E, underpinning a 17 per cent Ebitda CAGR and significant free cash flow generation in FY27E/28E.

Strong capabilities, execution potential

The report highlights TIL’s strong brand portfolio, integrated manufacturing base, and professional management team. Successful execution in revitalising Imperial Blue, scaling Spaceman Spirits, and innovating in mid-to-upper prestige IMFL categories will be critical to improving profitability, fortifying the balance sheet and unlocking long-term shareholder value.  =========================== 

(Disclaimer: The views and investment tips expressed by the analysts in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.)