TI - Tilaknagar Industries Ltd Share Price

During the Q1 FY26 earnings call, management provided an optimistic outlook, citing a strong growth trajectory with a 26.5% year-over-year increase in volume. The Net Selling Rate (NSR) saw a rise from Rs. 1,182 per case in Q4 FY25 to Rs. 1,193 per case in the current quarter. The company achieved a 31% YoY growth in net revenues, adjusted for a subsidy income of Rs. 38.6 crore, leading to a robust growth of 20.5%. EBITDA for Q1 was reported at Rs. 94 crore, with an adjusted figure of Rs. 56 crore, reflecting a 25% YoY increase and an EBITDA margin expansion of 55 basis points to 15.1%.

Key forward-looking points discussed include:

1. Management anticipates continued strong performance and market share gains, particularly in southern states like Telangana and Karnataka, which account for a significant portion of IMFL consumption.
2. The company is focused on the premiumization of its portfolio, including the growing luxury brands and the distribution of Spaceman brands, following the strategic investment raising its stake to 21.36%.
3. The planned acquisition of Imperial Blue from Pernod Ricard is significant, valued at approximately EUR 413 million, which includes a normalized working capital of EUR 70 million. The net revenue of Imperial Blue exceeded Rs. 3,000 crore for the trailing 12 months.
4. Following the acquisition, management targets a net debt-to-EBITDA ratio of less than 1.0x by FY29.
5. For FY26, mid to high teen revenue growth is expected, with EBITDA margins aimed in the range of 15% to 16.5%. For FY27, they are guiding for 15.5% to 17.5% EBITDA margins.

Overall, management expresses confidence in their strategies and future growth, aiming to establish Tilaknagar Industries as a leading pan-India IMFL player.

Q&A Section Overview

1. Question from Abneesh Roy: "Firstly, congrats on very good growth. I wanted to understand on the demand side... what has really led to this kind of performance?"

   Amit Dahanukar's Answer: "We are not seeing any slowdown in demand. Our Q1 volume growth surpassed 20%, particularly strong in southern states. Market share gains stem from the growth in Prestige and Above segments, buoyed by strategic investments in advertising and promotions."

2. Follow-Up by Abneesh Roy: "In Maharashtra, post the sharp tax hike... do you see double-digit volume decline?"

   Amit Dahanukar's Answer: "We are still examining Maharashtra's MML policy and our eligibility. Current presence is low; while possible impacts exist, these don't significantly drive our business."

3. Question from Naitik Mutha: "If I adjust for the subsidy income... there's a drop in gross margin. What effect does this drop in gross margin have?"

   Ameya Deshpande's Answer: "The drop is due to NSR reductions in Andhra. This corrected pricing will likely remain as a base moving forward, which means a continued impact on margins."

4. Question from Shirish Pardeshi: "What are the things at what stage we are regarding the integration of Imperial Blue?"

   Ameya Deshpande's Answer: "Due to confidentiality, limited detail can be shared. A Transition Services Agreement is in place to assist integration, and we anticipate a 6-month timeline for smooth business transition."

5. Question from Suvaan Mittal: "Why has the EBITDA margin from Q4 to Q1 decreased even though gross margins have increased?"

   Ameya Deshpande's Answer: "The reduction is attributable to higher legal costs and increased advertising spend for the quarter, alongside operating leverage which overall affected our margins."

6. Question from Rishabh Gang: "What are the possibilities for expansion in EBITDA margin for existing business?"

   Ameya Deshpande's Answer: "The premiumization strategy will contribute positively to margins, along with cost optimization in COGS and potential savings from reduced legal costs."

7. Question from Anjali Bajaj: "How will you raise the money for Imperial Blue?"

   Ameya Deshpande's Answer: "We're raising funds through a preferential issue of Rs. 2,300 crore and debt for the remainder. We're targeting a balanced 1:1 mix for the acquisition funding."

8. Question from Aaditya Singh: "When can we see the tax incident coming back?"

   Abhinav Gupta's Answer: "Our appeal is pending. As a prudent measure, from July 1, you may expect a full incidence of tax. We'll update once there's a change."

9. Question from Arpit Shah: "What was our valuation metrics for the Imperial Blue acquisition?"

   Ameya Deshpande's Answer: "Multiple valuation methods were considered, including DCF and multiples. Though we can't divulge specifics, we believe we paid a fair price for strategic value."

10. Question from Daksh Malhotra: "Can you provide EBITDA margin guidance post-acquisition?"

    Ameya Deshpande's Answer: "We're unable to guide on combined business margins until closing is complete. We'll provide further details then."

Summary

The Q&A reflected strong demand despite external economic pressures and strategic growth through acquisitions. Finding efficiencies, maintaining market presence, and managing margins were prioritized themes in discussions with analysts.