Alcohol stock to buy now for an upside of 35%; Recommended by ICICI Direct

Synopsis: Brokerage maintains a Buy with a ₹690 target, implying 35% upside from ₹510.65. EBITDA margin guidance raised to 17–18% by FY28, backed by ₹700 crore capex and backward integration. The luxury portfolio is expected to double from ₹40 crore to ₹80 crore, supporting recovery ahead.

India’s breweries and distilleries sector thrives amid rising disposable incomes and premiumization trends. In FY2025, the alcohol market reached USD 60.11 billion, growing at a 7.7% CAGR, fueled by spirits dominating 35.1% share and mid-range products at 40.3%. Sales volumes hit around 450 million cases, up from 405 million prior, with South India contributing 58% of whiskey. Urban youth drive this dynamic industry forward.

With a market capitalisation of Rs 14,307.17 crore, the shares of Allied Blenders and Distillers Ltd were trading at Rs 511.50 per share, increasing around 0.36 percent as compared to the previous closing price of Rs 509.65 apiece.

Brokerage Recommendation

ICICI Direct has issued a ‘Buy’ rating on the alcohol stock with a target price of Rs 690, implying a 35% upside from Wednesday’s closing price of Rs 510.65. The recommendation reflects confidence in the company’s growth visibility, improving margins, and strategic expansion plans over the medium term.

As per the brokerage, Q3FY26 performance remained muted with revenue growth at just 3%, but recovery is expected in Q4FY26. Management guides revenue growth of 12–13%, led by improvement in Telangana, steady double-digit P&A growth, and the luxury portfolio doubling from ~Rs 40 crore to ~Rs 80 crore sequentially.

Further brokerage except, margin outlook has improved meaningfully, with EBITDA margin guidance raised to 17–18% by FY28 from 15% earlier. Backward integration through a new PET plant in Telangana and additional bottling units, along with premiumisation and luxury expansion, are expected to drive sustainable margin expansion.

Additionally, the company’s capex has been revised upward to Rs 700 crore from Rs 525 crore to strengthen integration benefits. The acquisition of a UP facility and expansion in Maharashtra are expected to reduce franchisee and logistics costs. These efficiencies are likely to further support the upgraded 17–18% margin guidance.

Financials

The company delivered steady growth in Q3FY26, with revenue rising 3% to Rs 1,003 crore from Rs 974 crore a year earlier. Net profit increased 12% to Rs 64 crore from Rs 57 crore, indicating improved operational performance and stable demand, though profit growth remained relatively moderate compared to topline expansion.

The company has built a strong pan-India distribution network spanning 30+ states and UTs, supported by over 80,000 retail touchpoints and 12 sales offices. Its diversified route-to-market presence across open, government, wholesale, defence, and export channels strengthens scale. Focus on premium and luxury portfolio expansion across 2,000+ on-premise outlets further enhances growth potential.

Allied Blenders and Distillers Limited is one of India’s leading alcoholic beverage companies, known for its strong presence in whisky and other spirits. With a growing premium portfolio and a wide distribution network, the company caters to diverse consumer segments while focusing on brand building, innovation, and expanding its global footprint.

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