Allied Blenders and Distillers: Premiumisation Underway

Allied Blenders & Distillers makes Indian Made Foreign Liquor. Its flagship is ICONiQ White whisky; the portfolio also includes Officer’s Choice Blue, Sterling Reserve B7 and the Allied Blenders Maestro luxury range. P&A and Mass Premium & Others are its two segments. What happened: In H1FY27, revenue grew 10.9% to Rs 2,135 crore. Gross margin expanded 180 basis points to 45.6%. EBITDA rose 5.8% to Rs 263 crore, with EBITDA margin at 12.3%, down 60 basis points. Net profit fell 4.2% to Rs 114 crore. A West Asia supply disruption caused an exceptional charge of Rs 53 crore; excluding this, EBITDA would have been Rs 316 crore, up 27.1% at a margin near 15%. P&A sales grew 14.7% on 8.3% volume growth and 5.9% higher realizations. Why it matters: The premiumisation push is showing in realizations. P&A commands better prices, and as it grows faster than mass volumes, the mix improves. Management targets EBITDA margins of 18% and ROCE of 23-25% by FY28. Backward integration into captive extra neutral alcohol and malt distilleries across Maharashtra, UP and Andhra Pradesh, plus the India-UK free trade agreement, is expected to add around 300 basis points to margins by FY28. What I am watching: Allied Blenders trades at 83.9 times trailing earnings, above its five-year median of 75.6 times and the industry at 46 times. ROCE fell to 18.4% from 19.7% a year earlier. ICONiQ White’s volume growth moderated from 33.8% in Q1 to 20.6% in Q2. My stance: The direction is right, but execution has not yet converted strategy into margins. At 83.9 times, above its own median, there is very little room for slippage in profits or capital returns. I do not hold a position in Allied Blenders and Distillers at the time of writing. This is not investment advice.