Radico Khaitan, Allied Blenders, And United Spirits Share Prices Surge On Jefferies' 'Buy' Ratings

Share price of United Spirits Ltd., Radico Khatian Ltd., and Allied Blenders & Distillers Ltd.rose on Monday after bullish commentary by Jefferies which intiated coverage on the companies with a 'Buy' rating for all of them.

Allied Blenders Ltd. rose 2.34% to hit an intraday high of Rs 558.45 apiece, Radico Khaitan rose 1.15% to hit an intraday high of Rs 2,932 apiece and United Spirits rose 1% to reach an intraday high of Rs 1,322.80 per share on Monday.

Allied Blenders has risen nearly 55% in the past 12 months, while Radico Khaitan rose nearly 38% in the same time period. Meanwhile, United Spirtis has fallen over 15% in the past 12 monts as per data recorded by Bloomberg.

The brokerage believes, "the spirits category offers premiumisation-led strong growth potential, with double-digit top-line compound annual growth rates across companies and meaningful room to expand margins."

Jefferies initiated coverage on United Spirits with a 'Buy' rating and target price of Rs 1,570. For Radico Khaitan, the brokerage has given a target price of Rs 3,590 with a 'Buy' rating, and similarly for Allied Blenders, the brokerage has a 'Buy' rating with a target price of Rs 620.

The brokerage has kept Radico Khaitan as the top pick in the sector in its alcoholic beverage universe. For United Spirits, the brokerage noted that it offers favourable risk-reward after the stock correction. However, for Allied Blenders, it said that the company is a dark horse, with meaningful upside, but execution holds the key.

"We see a meaningful margin expansion opportunity, as inflation stabilises and premiumisation continues, along with reduction in import duty on scotch post the India UK FTA. Margin uplift would be higher for Indian companies given their low base versus UNSP where Diageo brands are capped at 10%," the brokerage noted for the sector.