'Buy' Allied Blenders Shares Maintains ICICI Securities, Sees 25% Upside — Here's Why

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ICICI Securities Report

We met the management of Allied Blenders and Distillers Ltd. Takeaways:

1. Allied Blenders’ deep consumer understanding and national distribution network would help in driving higher growth in the profitable segment of super-premium and luxury.

2. Profitability from this segment would improve gradually due to higher investments in brand to ramp up volume/ visibility.

3. ICONiQ White to maintain its strong growth momentum while Officer’s Choice Whisky performance to improve (strategically focusing on profitable state and SKUs); both brands will remain the main drivers for profitability improvement.

4. Backward integration, operating leverage and UK-India FTA [not factored in our estimates] to improve profitability.

5. Allied Blenders’ growing presence in export markets also represents an opportunity over the long term.

Maintain Buy.

Key risks:

Significant downtrading due to tax hikes, a potential ban on spirits in states, higher-than-expected inflation in key raw material prices and changes in consumer preferences.

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