Allied Blenders Gets 'Buy' Rating As Systematix Initiates Coverage

Systematix Institutional Equities has initiated coverage on Allied Blenders and Distillers Ltd. with a 'buy' rating and a target price of Rs 502 per share, representing significant upside potential from the current market price of Rs 393. ABDL, a prominent player in India’s alcoholic beverages sector, has been making notable strides both domestically and internationally, driven by its flagship brand, Officer’s Choice Whisky, which ranks as one of the best-selling whiskies globally by volume.

The company’s robust portfolio includes ‘Millionaire Brands’ such as Officer’s Choice Whisky, Sterling Reserve, Officer’s Choice Blue, and ICONiQ White Whisky, the brokerage said. ABDL’s ability to capture market share in the premium segments is bolstered by strong manufacturing capabilities, an expansive distribution network, and a focus on backward integration, it said.

Systematix projects revenue growth, with a 12.6% compound annual growth rate in revenue, a 38.3% CAGR in Ebitda, and 256.6% CAGR in adjusted profit after tax between FY24 and FY27E.

A key aspect of ABDL's growth strategy is the premiumisation of its product portfolio. The company is shifting its focus from mass-market offerings to the prestige and above segments, which has driven strong growth in its high-margin luxury category, the brokerage noted.

ABDL’s share in the P&A segment of the Indian-made foreign liquor market has grown from 25% in FY18 to an expected 37.3% in FY24, with plans to reach around 50% over the next two-three years.

The company’s flagship brand, Officer’s Choice, which held a 20.9% market share in the mass premium whisky category in fiscal 2023, continues to dominate the Indian market. More than 60% of the brand’s mass premium sales are now derived from states where gross margins exceed 40%, underscoring its profitability.

ABDL has also seen notable success with ICONIQ White, which has emerged as the fastest-growing spirit brand globally. Launched in 2023, ICONIQ White achieved sales of over 1 million cases in its first year, with projections to reach an annual run rate of 4.5-5 million cases by FY25.