ABDL - Allied Blenders and Distillers Limited Share Price

Management's outlook for Allied Blenders and Distillers Limited (ABD) is optimistic, as the company has entered FY '26 with strong momentum, reporting its fourth consecutive quarter of profitable growth. Key forward-looking points highlighted by management include:

1. Financial Performance: Consolidated income from operations rose to Rs.930 crores in Q1 FY '26, a 22.5% increase year-on-year. EBITDA surged by 56.4% to Rs.119 crores, with an expanded EBITDA margin of 12.8%, up 277 basis points from 10% in Q1 FY '25. Profit after tax increased fivefold to Rs.56 crores from Rs.11 crores in Q1 FY '25.

2. Volume Growth: The company delivered 8.5 million cases in Q1 FY '26, a 17.2% year-on-year increase, driven by a 6.2% rise in realization per case.

3. Category Performance: The P&A portfolio exhibited strong growth of 46.9%, increasing overall P&A salience to 46.2% in volume terms and 55.8% in sales value compared to 36.9% and 46.1% in Q1 FY '25.

4. CAPEX Plans: ABD's ongoing Rs.525 crore CAPEX program is on track, with the PET manufacturing facility expected to start operations in September '25 and a single malt distillery set to launch in Q4 FY '26. These initiatives are projected to contribute approximately 300 basis points of EBITDA margin improvement from Q4 FY '27 onwards.

5. Debt and Working Capital: The company reduced its net debt to Rs.754 crores from Rs.766 crores between March and June '25, achieving a net debt to equity ratio of 0.47x. Strong profit performance and working capital optimization support this reduction.

6. Market Expansion: ABD's international presence expanded from 14 to 27 countries, and they expect to capitalize on new markets in Canada, South America, New Zealand, and the EU, further strengthening their global consumer franchise.

Management remains focused on driving sales growth, operational excellence, and optimizing working capital while executing their strategic initiatives to align with India's evolving premium consumption trends.

Earnings Call Q&A Highlights

1. Question: Regarding Golden Mist, which markets will you focus on and who are the competitors? Additionally, after the tax hike in Maharashtra, have companies absorbed the costs or passed them on?
   Answer: We're focusing on Karnataka and Telangana, with plans for Andhra Pradesh and smaller territories. Competitors include Napoleon Brandy and Mansion House. Following the tax hike, most competitors have passed on the costs to consumers, resulting in reduced margins. We will evaluate the overall impact when more clarity on the MML policy is available.

2. Question: How has your feet on street changed post-IPO, and what about visibility at points of sale?
   Answer: We have about 500 sales personnel covering over 90% of allowed outlets. Post-IPO, we shifted focus from volume to profitable margins, realigned incentives toward value, and launched a new sales initiative, Jeet, to enhance visibility and performance tracking. These measures help drive growth aggressively.

3. Question: Why are you entering brandy and vodka markets which are smaller? What is the long-term contribution of whisky?
   Answer: Whisky has historically maintained a 65% market share. However, brandy (Golden Mist) and vodka (Russian Standard) operate in high-margin segments that grow double digits. These segments represent opportunities for creating additional millionaire brands while whisky remains a significant part.

4. Question: How will you achieve double-digit market share in the brandy and vodka segments, considering existing strong competitors?
   Answer: Premiumization is evident across all categories, not just whisky. Younger consumers are open to new experiences, which we're leveraging through brands like Golden Mist appealing to this demographic. Our focused marketing strategies give us confidence in capturing market share.

5. Question: How do margins vary across your different segments, and where do you anticipate growth?
   Answer: Our Mass Premium segment maintains gross margins above 40%. In the Prestige category, margins are currently below 40%, but we aim to exceed 50% soon. Premium and Super-Premium segments yield margins around 55%. We expect significant growth from these categories while maintaining margin discipline.

6. Question: What plans do you have to stabilize and grow Sterling Reserve B7 and what indicators can we expect?
   Answer: We aim to stabilize Sterling Reserve B7 by H1 and anticipate growth during the festive season fueled by marketing initiatives. We expect to see green shoots as we implement these strategies.

7. Question: What impact do you foresee from recent excise duty changes?
   Answer: The magnitude of the impact remains uncertain until the new MRL inventory fully rolls out. We expect this complexity to clarify consumer choices, as current sales reflect both old and new pricing structures.