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Systematix Report
Allied Blenders and Distillers Ltd. remains a compelling growth story, underpinned by strong manufacturing capabilities, an expanding premium portfolio and improving margins, according to Systematix' note that maintains a ‘Buy' rating on the stock with a target price of Rs 722.
The brokerage believes Allied Blenders is well-positioned to deliver sustained growth and profitability, supported by its robust manufacturing and distribution network, along with increasing backward integration and premiumisation of its product portfolio. These structural strengths are expected to drive long-term value creation for the company.
A key near-term tailwind highlighted is the reduction in customs duties on imported Scotch, which is likely to benefit Allied Blenders by lowering input costs and supporting margin expansion. This development is expected to strengthen the company's premium offerings and enhance profitability over time.
Growth in the super-premium and luxury segments will be driven by the company's ABD Maestro brand, although the brokerage expects profitability from this venture to be gradual. Due to higher brand investments, the segment is likely to turn Ebitda positive only by FY28E, indicating a phased monetisation strategy.
From a financial perspective, the brokerage has pencilled in a revenue CAGR of 13.2% over FY26–FY28, driven by a volume CAGR of 9.8%. Within the portfolio, the prestige and above (P&A) segment is expected to grow at a strong 18.6% CAGR, significantly outpacing the mass premium segment, which is projected to grow at a modest 1.2% CAGR during the same period.
On profitability, Ebitda is expected to grow at a CAGR of 23.7%, supported by operating leverage and premiumisation. The brokerage has built in an Ebitda margin expansion of around 269 basis points, with margins improving from 13.8% in FY26 to 16.5% by FY28E.
Earnings growth is expected to remain robust, with PAT projected to grow at a CAGR of 38.8% over FY26–FY28. Adjusting for one-time tax impacts in FY26, the core PAT CAGR stands at 26.5%, still reflecting strong underlying earnings momentum.
Overall, the brokerage remains constructive on Allied Blenders, citing premiumisation-led growth, improving margins and favourable policy support as key catalysts that could drive re-rating in the medium term, while reiterating its positive stance on the stock.
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