Diwali cheer for liquor stocks: Radico, Allied Blenders record new highs

Liquor stocks in focus: Radico Khaitan sees substantial long-term opportunity in premium and luxury brands owing to rising affluence, evolving preference, and rising demand for elevated experiences.

Shares price of liquor companies today

 

Shares of liquor companies were on a roll with Radico Khaitan and Allied Blenders & Distillers hitting their respective all-time highs as they soared up to 6 per cent on the BSE in Monday’s intra-day trade owing to a healthy outlook.

 

Share price of Radico Khaitan hit a new high of ₹3,276.80, gaining 5 per cent in intra-day trade. The stock of the breweries & distilleries company was quoting higher for the fourth trading day and has rallied 13 per cent during the period.

 

The market price of Allied Blenders and Distillers (ABDL) soared 6 per cent to ₹583.45 in intra-day deals. Thus far in the month of October, the stock has surged 15 per cent. 

 

 

Shares of Jagatjit Industries rallied 10 per cent to ₹204.70, followed by GM Breweries (7 per cent at ₹ 1,195), Tilaknagar Industries (TIL) (5 per cent at ₹ 491.35), United Breweries (up 2 per cent at ₹ 1,814.35) and United Spirits (1 per cent at ₹ 1,376).  CATCH STOCK MARKET LIVE UPDATES TODAY 

What's driving liquor stocks?

 

Radico Khaitan is among the oldest and one of the largest manufacturers of Indian Made Foreign Liquor (IMFL) in India. The company is also one of the largest providers of branded IMFL to the Canteen Stores Department (CSD), which has significant business barriers to entry.

 

In Q1, Radico Khaitan delivered its highest-ever quarterly volumes, net sales and profitability. IMFL volumes grew by an impressive 37.5 per cent, led by strong demand for its premium portfolio. A stable raw material environment and a favorable product mix supported healthy year-on-year margin expansion.

 

The Indian AlcoBev industry is undergoing a structural shift from traditional consumption patterns to a more lifestyle-driven category. With rising affluence, evolving preference, and increasing demand for elevated experiences, Radico Khaitan in Q1 earnings conference said the company sees substantial long-term opportunity in the premium and luxury segments. Given the strong growth momentum, the company said it is poised to deliver 20 per cent plus overall volume growth in FY26 with robust contribution from the prestige and above category.

 

Meanwhile, the acquisition of the Imperial Blue brand is expected to strengthen TIL’s market position within the IMFL industry. Imperial Blue is among the top three largest-selling whisky brands in India by volume. The brand addition will significantly expand TIL’s scale, product portfolio and market share, especially in the mass-premium whisky segment.

 

TIL’s revenue from existing business is expected to grow over the near-to-medium term, driven by strong demand for existing products, uptick in demand from Andhra Pradesh (30 per cent of revenue) owing to privatisation of liquor retail outlets (effective October 2024), high revenue contribution from new products in the premium category and the growing geographic penetration, according to Crisil Ratings.

 

ABDL is the third largest liquor company in India with a large focus on premiumization to drive consistent growth in the long run. Prestige & Above (P&A) contribution has gone up to 40 per cent from 25 per cent in FY18. Large shift to premium liquor products, launch of new products and expansion in newer markets will help ABDL’s P&A contribution to increase to 50 per cent by FY28, according to ICICI Securities.

 

Expansion in the gross margins will directly flow through EBIDTA over the next three years. EBIDTA margins are expected to improve to 15 per cent in FY28 from 12 per cent in FY25. Further the deal with UK-FTA will incrementally add 150-200bps to the EBIDTA margins by FY28. With better profitability and lower debt, the company expects its RoCE to increase to 26 [per cent in FY28 from 18 per cent in FY25. Riding on premiumisation strategy, ABDL’s revenues and PAT are expected to grow at a CAGR of 14 per cent and 36 per cent respectively over FY25-28E, the brokerage firm said. It has assigned a Buy rating with a target price of ₹640 (valuing at 42x average FY27-28E EPS of ₹15.2).