The maker of Officer’s Choice, one of India’s most consumed whiskies, Allied Blenders & Distillers is in high spirits. The share price is in focus as the company evolves beyond the brand into a more youthful and full-portfolio prestige and above player.
Global brokerage house, Nomura has initiated coverage on Allied Blenders & Distillers with a ‘Buy’ recommendation and a target price of Rs 850, implying an upside of around 18% from the stock’s closing levels on Monday.
Nomura on Allied Blenders & Distillers
Allied Blenders’ has broadened its presence across other Indian-made foreign liquor categories with the ICONiQ White whisky being the flag bearer of this transition. ICONiQ White has emerged as a brand rapidly gaining popularity among millionaires for the past three consecutive years and reached 10.7 million cases in FY26.
This led to the company’s volumes and sales in prestige and above portfolio to record a 20% compounded annual growth rate over FY24-FY26, lifting its contribution from 37% to 47%.
The company also launched its super-premium brands through ABD Maestro in FY26, which has 10 brands across whiskey, gin, vodka and rum, and is focused on scaling them through by FY28. Allied Blenders has also recently forayed into premium whisky with ‘The Indian Edit’ and plans to enter into the deluxe vodka market soon. It is also working on its own Single Malt offering, expected in 2029.
“While these newer brands create the next leg of premiumisation growth, OC (Officer’s Choice) remains the strong core franchise, providing pan-India distribution (80% penetration) which only the top 3-4 companies have, and is a cash cow,” Nomura said, adding that the company’s presence across 39 countries provides significant headroom to take its newer brands globally.
Beyond premiumisation
Allied Blenders & Distillers is also stepping up investments in backward integration across three key raw materials, malt, extra neutral alcohol, and polyethylene terephthalate. This, coupled with a total capital expenditure plan of more than Rs 16 billion, should improve supply security and reduce cost competitiveness, as per Nomura.
These factors, together with sustained volume growth in its existing portfolio and operating leverage, is likely to aid the company in achieving its target of around 48% gross margin, 18% EBITDA margin, and 23%-25% return on capital employed by FY28. “The company plans to fund its capex investments through internal accruals and external funding; however, management has maintained its leverage guardrails of net debt/EBITDA below 2x and net debt/equity below 0.75x, providing comfort in its investments behind growth,” Nomura said.
The brokerage flagged delays in execution and a slower shift to premium products as the key downside risks. It has projected an earnings per share growth of 26% CAGR over FY26-FY29.
Conclusion
Nomura remains bullish on Allied Blenders and Distillers, projecting a nearly 18% upside as the company continues its premiumisation journey. Raw material security and structural cost efficiency should also aid its performance.
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