Global brokerage house Jefferies has retained its 'Buy' rating on Allied Blenders and Distillers (ABDL) with a target price of ₹780. This translates to approximately 28% upside from the current market price, as reported by The Financial Express. The brokerage's bullish outlook is driven by the company's strategic shift towards premium products, brand launches, and margin improvement initiatives. Jefferies emphasizes that Allied Blenders is evolving from a turnaround story into a premiumisation-led growth story, with management remaining confident of sustaining strong momentum in key brands.
The company's ICONiQ White whisky brand serves as the central growth driver for Jefferies' investment thesis. Management expects the brand to maintain more than 20% growth over the medium term and continue gaining market share, according to the brokerage report. Additionally, Allied Blenders is relaunching three older brands in FY27 - Officer's Choice, Officer's Choice Blue and Sterling Reserve B7, which could provide additional momentum to the company's portfolio expansion strategy. The relaunch of legacy brands and new launches in premium whisky and deluxe vodka are expected to support strong double-digit P&A volume growth over the medium term, with management anticipating mid-to-high teens growth in its Prestige & Above (P&A) portfolio.
The company is expanding its premium portfolio through new launches in deluxe vodka and premium whisky, with management expecting double-digit volume growth over the medium term, led by mid-to-high teens growth in its Prestige & Above (P&A) portfolio. After delivering approximately 650 basis points of EBITDA margin expansion over FY24-26 through premiumisation, refinancing and cost optimisation, management expects further improvement from a richer product mix, continued premiumisation and benefits of backward integration. As reported by Jefferies, margin improvement is expected to be more visible in FY28 as backward integration and operating leverage begin to contribute. The brokerage expects meaningful margin expansion over FY26-28e driven by premiumisation and the benefit of backward integration.
Allied Blenders is investing heavily to gain control over parts of its supply chain, with total announced capital expenditure of ₹1,500 crore, of which around ₹5 billion has already been incurred. Investments are focused on Extra Neutral Alcohol (ENA), malt maturation, bottling and other backward-integration projects aimed at enhancing supply security, improving quality control and driving structural profitability. The company's balance sheet remains relatively comfortable with net debt-to-EBITDA below 2 times. The backward integration strategy is central to the company's medium-term growth agenda, with investments aimed at providing operational advantages and cost control benefits.
Jefferies expects the India-United Kingdom Free Trade Agreement (FTA) to gradually reduce procurement costs for Scotch, which could provide additional support to margins. The brokerage also notes a more favourable regulatory environment in some states, including Karnataka, while Allied Blenders has reduced its dependence on Telangana from more than 30% of its business to around 25% over the past two years. The biggest near-term focus will be whether ICONiQ White can sustain its growth and whether legacy-brand relaunches begin contributing meaningfully, with Jefferies expecting FY27 margin expansion to remain limited while more meaningful improvement is anticipated in FY28. The company's strategic positioning in the premium segment and operational improvements through backward integration are expected to support sustainable growth momentum.
