Nuvama Wealth Management has reiterated a Buy rating on key stocks in the alco-bev sector after Q2FY26 numbers showed wider margins and a rare sequence of demand tailwinds concentrated in Andhra Pradesh. The brokerage said sector revenue rose 11.5% year-on-year while EBITDA jumped 32.5% year on year, driven by premium mix, better pricing and stable raw material costs. It added that Andhra’s re-opening and tender-led traction overshadowed the drag from Maharashtra’s price hike and Telangana’s unsettled dues.
Here is a detailed analysis of Nuvama’s top picks and the investment rationale-
Nuvama on United Spirits: ‘Buy’
United Spirits posted the strongest margin profile among peers. Gross margin went up to 47.1% while EBITDA margin rose to 21.2%. The brokerage noted that the P&A segment grew to 12.4% in revenue and 8% in volume year on year, reflecting sustained premium momentum. Management is guiding for double-digit top-line growth in FY26 with bottom-line expansion running ahead on the back of productivity initiatives.
Meanwhile, United Spirits’ performance in Maharashtra remained comparatively firm despite the state’s 35% price hike. The company’s volume decline was estimated at 10–15% compared with roughly 20% for rivals, helped by channel alignment and tighter execution. Andhra continued to be a key contributor. The brokerage said the newly introduced Maharashtra Made Liquor SKU, priced at Rs 160 for 180ml, adds uncertainty around displacement, but management plans to evaluate trends over the next few quarters.
Nuvama on Allied Blenders & Distillers: ‘Buy’
Allied Blenders delivered net revenue of Rs 960 crore and EBITDA of Rs 130 crore in Q2FY26. The premium segment volumes climbed by about 30% year on year, lifting premium salience to 47% in Q2 from 40% a year earlier. Gross margin moved up to 44.4%. Nuvama said the company’s Rs 110 crore PET-bottle manufacturing project is likely to save around Rs 30 crore annually, adding roughly 75 basis points to gross margin once fully operational. ABD has expanded its international reach to roughly 30 countries and expects to push global salience to 12–15% in the coming years. Telangana’s retail-license transition caused temporary disruption, although the state has started clearing dues ABD has received Rs 100 crore with around Rs 600 crore outstanding. Andhra, on the other hand, saw volumes more than double year on year due to new tenders.
Nuvama on Radico Khaitan: ‘Buy’
Radico Khaitan led sector growth in Q2. Net revenue rose to Rs 1,490 crore and EBITDA increased to Rs 240 crore, translating into 34% and 46% year-on-year gains. Volumes went up 38% year on year, with the regular and others segment rising 80% on strong traction in Andhra. P&A volumes climbed 22% year on year to their highest-ever quarterly level. Radico’s market share in Andhra surged to about 30% from 10% in Q2FY25, a shift that helped the company regain momentum in mid-priced segments. Management is confident of exceeding 20% volume growth in FY26, supported by stable-to-favourable grain and ENA prices. The report said EBITDA margin is expected to expand by about 150 basis points this year, with further annual improvement of roughly 125 basis points over the next two years. Radico reduced debt by about Rs 150 crore over six months and aims to be debt-free by FY27.
Nuvama on United Breweries: ‘Buy’
United Breweries faced weather-linked setbacks, yet the brokerage maintained its buy stance as premium resilience and market share gains countered some of the pressure. Revenue and volumes declined by about 3% year on year in Q2, but premium volumes grew 17% and the premium portfolio’s share improved to 30% from 25%. The brokerage said UBBL gained nearly 100 basis points of share in an industry that itself contracted mid-single digit. Heavy monsoons and floods disrupted three breweries, with steep state-level declines in Karnataka and Telangana. Still, Maharashtra posted 15–16% volume growth for UBBL, driven by higher taxes on spirits that benefitted beer demand. Pricing growth is expected around 4–5% with volume growth of 5–6% under current conditions, the brokerage added, noting that recovery signs were visible with September volumes rising 4–5%. Barley inflation remains a watch point for H2.
Nuvama on Tilaknagar Industries: ‘Buy’
Tilaknagar posted revenue of Rs 40 crore in Q2 while volumes increased to 3.4 million cases, a 16.3% rise. EBITDA declined due to cost pressure, although Nuvama pointed to catalysts that may alter the trajectory. The brokerage said the company has secured CCI approval for the Imperial Blue acquisition and expects management to revise its margin outlook after the deal is completed. Tilaknagar also entered the premium malt category with Seven Islands Pure Malt, signalling a move beyond its mid-priced portfolio.
Across the sector, the brokerage marked Andhra Pradesh as the prime swing factor, saying the state’s tender-led expansion and renewed retail environment helped offset Maharashtra’s contraction and Telangana’s payment delays. It warned that around Rs 3,000 crore in pending dues across companies in Telangana continues to strain cash flows, with industry bodies urging the state to release payments, return outstanding cycles to 45 days and cut advance excise duty to 1% to ease working capital.
Nuvama said the core investment case rests on premiumisation, softer ENA and glass prices for spirits, and productivity gains that are lifting margins even in uneven state conditions. For now, the brokerage believes these trends carry more weight than the risks. Investors, though, will look to Q3 demand and state-policy moves to decide whether this margin cycle can hold beyond the festive quarter.