TI - Tilaknagar Industries Ltd Share Price

Management provided a positive outlook for Tilaknagar Industries, particularly following the successful integration of the Imperial Blue acquisition. Key highlights from the forward-looking statements include:

1. Volume Growth: Despite a forecasted low to mid-single digit volume decline for Imperial Blue in FY26 due to earlier underperformance, management expects a recovery with high-single digit to low-double digit growth for the combined business in FY27. Furthermore, they anticipate sustained low-double digit growth over the subsequent years.

2. Financial Performance: Management expects to achieve a consolidated EBITDA margin expansion of 150 to 250 basis points (bps) over the next 24 to 36 months for the combined business. For Imperial Blue, margins are expected to increase by 225 to 350 bps over the same timeframe.

3. Debt Management: Tilaknagar anticipates reducing its net debt-to-EBITDA ratio to below 1.0x by FY29. The company has taken on significant debt of Rs. 2,100 crore but plans to manage it effectively, aided by the revenue growth from the recent acquisition.

4. Integration Strategy: The integration of Imperial Blue is a primary focus, with operational synergies being realized through cost-saving initiatives. Management has engaged a Big 4 consultant for operational integration, aiming to transition to a TI-led operational framework by Q4 FY26.

5. New Product Development: They are optimistic about launching new whisky brands under the "House of TI" and enhancing the luxury segment through partnerships, specifically with Spaceman Spirits Lab.

6. Market Opportunity: Management emphasized access to a 200 million+ cases opportunity in the Indian Alcobev market, which aligns with their strategy to capitalize on premiumization trends.

Overall, management expressed confidence in leveraging their strengthened portfolio and distribution network to drive long-term growth and profitability.

Question 1: Karan Kamdar from Choice Institutional Equities asked: "Now that the transaction is complete, what sort of margins are we looking at ex-IB as well as including IB and what are the prospects going ahead?"
Answer: We expect the steady-state margin of Imperial Blue before acquisition to be around 11.7%. Over the next 24 months, we anticipate a 225-350 bps increase. For the combined business, we are guiding an expansion of 150-250 bps on top of the previous margin of approximately 15%.

Question 2: Venkatesh from Alpha Investors inquired: "What will be the growth rate for the IB brand for this year and next year?"
Answer: We anticipate that for FY27, the combined business will experience high single-digit to low double-digit volume growth, followed by low double-digit growth in subsequent years. Revenue growth is expected to be about 150-200 bps above volume growth.

Question 3: Heer Gogri from Choice Equities asked: "Is Prag distilleries on track to be fully operational this quarter?"
Answer: Yes, we plan to commission the Prag distillery by the end of Q4 FY26. While we may not achieve 100% utilization immediately in Q1 FY27, we expect to reach close to full capacity throughout the year. There are minimal pending investments to complete.

Question 4: Ajay Thakur from Anand Rathi Securities questioned: "What impact are we seeing because of the MML brands?"
Answer: The introduction of the MML segment has led to a roughly 25% de-growth in the prestige category, affecting Imperial Blue. However, Imperial Blue is maintaining its market share despite the challenges arising from this new category.

Question 5: Vikrant Joshi, an Individual Investor, expressed concerns about investor opportunities. He asked: "How can we improve profitability?"
Answer: We appreciate your long-term support and assure you that our management team is focused on improving margins. This includes guiding towards margin expansions and continuing to deliver strong operational performance, particularly following the integration of Imperial Blue.