Several alcohol manufacturing stocks are in focus after the Q4 earnings. JM Financial has maintained a positive rating on United Spirits (UNSP) and Allied Blenders and Distillers (ABD), and raised the price targets for both.
However, the two companies are at very different points in their journey. Here is what the brokerage has to say about both.
On United Spirits, the Diageo subsidiary, JM Financial retained an ‘Add’ rating and raised its 12-month price target to Rs 1,445 from Rs 1,400, implying an upside of about 9% from the current price.
Meanwhile, JM Financial rated Allied Blenders and Distillers, the maker of Officer’s Choice whisky, as ‘Buy’ and raised the target to Rs 650 from Rs 610, suggesting a potential 17% return from current levels.
How the Q4 stacked up
United Spirits’ Q4FY26 standalone net revenue grew 3.4% year-on-year to Rs 3,050 crore. Volumes fell 5.6% year-on-year, weighed down by a full-quarter impact of the Maharashtra state policy change, which hurt the popular and lower-prestige segments, and the normalisation of a route-to-market benefit in Andhra Pradesh that had flattered earlier quarters.
The prestige-and-above, or P&A, segment, the more valuable part of UNSP’s portfolio, grew 4.9% in sales.
Allied Blenders posted consolidated revenue growth of 9.4% year-on-year to Rs 1,000 crore for the same quarter. Volume growth came in at 8.8%. P&A sales were growing 24.2% year-on-year, led primarily by ICONiQ White. The mass premium segment, which includes the flagship Officer’s Choice, saw sales dip 2.8% year-on-year, though volumes were flat, an improvement over the 5% decline seen in the nine months prior.
Q4 margin performance and profitability
Despite the softer topline, United Spirits delivered a positive surprise on profitability. Gross margins expanded 281 basis points year-on-year to 47.3%, ahead of the brokerage’s estimate of 46.4%, driven by a stable raw material environment, pricing benefits flowing through, and cost efficiencies.
United Spirits’ staff costs and advertising spends were tightly managed. EBITDA grew 17% year-on-year to Rs 590 crore with EBITDA margins expanding 226 basis points to 19.4%.
Allied Blenders Q4 also beat on margins. Gross margin expanded 480 basis points year-on-year to 48.2%, aided by a benign input cost environment and early benefits from the company’s backward integration investments. EBITDA grew 24.4% year-on-year to Rs 170 crore with margins expanding about 200 basis points to 16.8%.
That said, the net profit fell to Rs 41 crore from Rs 78.6 crore. As per the report, this was primarily because of a higher tax outgo that included interest and tax expenses pertaining to prior years. Adjusted for that one-time charge, net profit grew around 10% year-on-year.
The common headwind: packaging costs
Both companies flagged the same near-term concern: packaging material inflation driven by geopolitical disruptions. For United Spirits, the brokerage estimates this will shave roughly 125-150 basis points off gross margins in the June quarter, translating to a cost impact of Rs 35-40 crore. If tensions persist longer than expected, that impact could roughly double, the company warned.
For Allied Blenders and Distillers, the immediate worry is rising glass prices, which analysts believe could squeeze margins in the first half of FY27. But the pressure may ease later in the year. The company’s new PET bottling plant in Telangana, which is already operational, is expected to help lower packaging costs through backward integration. Brokerages also see support coming from likely price hikes in Telangana and possible gains from the India-UK Free Trade Agreement in the second half of the fiscal year.
Growth drivers: Where the two differ
According to JM Financial, United Spirits is no longer chasing aggressive expansion but focusing on strengthening and steadily growing its premium liquor business. The brokerage believes the company can still deliver double-digit growth in its prestige-and-above (P&A) segment in FY27, helped by three key factors: Karnataka’s favourable new excise policy, where United Spirits already has a strong presence; hopes that business conditions in Maharashtra will not worsen further; and a series of portfolio moves, including the relaunch of McDowell’s with a refreshed blend and new packaging.
Its premium brands, such as Signature, Black & White and Johnnie Walker, continued to see healthy demand. Meanwhile, Smirnoff crossed the one-million-case mark in FY26. Don Julio, the tequila brand, has also scaled up quickly and now accounts for roughly a third of India’s tequila market, according to the brokerage.
Allied Blenders and Distillers is still a relatively smaller player compared to larger liquor companies, but it is growing quickly and trying to build a stronger presence beyond the mass-premium category.
Much of that growth is currently being driven by ICONiQ White, which saw volumes jump nearly 88% in FY26 and crossed the 10 million case milestone in the March quarter. The brand sits in the sweet spot between the deluxe and prestige segments, giving the company an opportunity to attract consumers trading up from cheaper brands as well as those looking for more affordable premium options, as per the report.
At the same time, Allied Blenders is trying to broaden its premium portfolio. It is investing in ABD Maestro, its super-premium and luxury business, while also attempting to stabilise legacy brands such as Officer’s Choice Blue and Sterling Reserve B7, which have been under pressure.
The company is also preparing to enter the prestige brandy and prestige vodka categories. During the earnings call, new managing director Amar Sinha outlined a three-year roadmap aimed at making prestige-and-above products account for more than half of the company’s volumes and roughly 70-75% of its total value.
Growth outlook for FY27
JM Financial has slightly lowered its FY27 expectations for United Spirits, mainly because rising packaging costs are expected to weigh on margins. The brokerage now estimates the company’s FY27 profit after tax at about Rs 1790 crore, around 1.8% lower than its earlier forecast. However, its longer-term view remains largely intact, with FY28 earnings estimates broadly unchanged and earnings per share projected at Rs 28.1.
For Allied Blenders and Distillers, the brokerage has taken a more cautious near-term view. It cut its FY27 profit estimate by around 7% to Rs 320 crore, factoring in weaker margins in the near term and higher depreciation costs linked to the company’s ongoing capital expenditure plans. At the same time, it raised its FY28 projections, now expecting profit after tax to reach Rs 460 crores, with earnings per share estimated at Rs 16.3.
The next few months will test both companies in different ways. United Spirits needs Maharashtra to stop getting worse. Allied Blenders needs to prove that ICONiQ White is the beginning of a portfolio story, not the whole story.
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