Despite modest mid-to-high single-digit growth at the overall industry level, the prestige and above (P&A) segment – the sweet spot for most listed companies – is expanding at a double-digit pace, led by scotch and white spirits clocking 15–20% CAGR. Analysts note that this premiumisation push is not only boosting topline momentum but also creating room for margin expansion as the operating environment stabilises.
Jefferies highlights that Indian players have built meaningful positions in fast-growing categories like vodka and Indian single malts, while also strengthening their premium portfolios through new launches. Multinationals are also doubling down on premiumisation, exiting lower price points and accelerating innovation across vodka, gin, rum, tequila, and brandy.
Regulatory reforms in several states, including lower taxation for premium products and retail privatization, have further strengthened the sector, although recent tax hikes in Maharashtra posed a setback.
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Here’s why four major names — United Spirits, Radico Khaitan, United Breweries, and Allied Blenders — could rally up to 18%, according to two brokerage firms.United Spirits – Seen as a key proxy for India’s alco-bev premiumisation story, the company holds a dominant 45% share in the premium and luxury whisky segment, compared with 17% in overall IMFL and about 30% for rival Pernod. United Spirits is also gaining ground in mid and upper-prestige categories, though it still trails Pernod here. Jefferies expects FY26 tailwinds from duty reductions on bulk scotch and BIO brands under the UK FTA. Beyond its strong portfolio, United Spirits benefits from access to Diageo’s global brands, further strengthening its position.However, challenges remain. Maharashtra, which accounts for a mid-to-high-teens share, could see revenue impacted by the recent tax hike from Q2 onwards. Margins may also be pressured, especially in mid-prestige segments, as the company absorbs part of the tax increase. Jefferies has set a price target of Rs 1,570, implying an upside of 18% from current levels.
Radico Khaitan: Revenue growth remains strong, supported by steady market share gains in both the overall IMFL segment and the prestige & above (P&A) category, aided by a favourable regulatory environment in key states such as Uttar Pradesh and Andhra Pradesh, which together contribute around 40% of volumes. Its flagship brand Magic Moments, accounting for about half of P&A sales, is benefiting from rising demand for white spirits, delivering high-teens growth. JM Financial notes that growth is picking up in the whisky segment, where Radico is relatively underrepresented, with a recovery in 8PM Premium Black, increasing traction for After Dark, and expansion of its luxury portfolio. JM Financial has initiated coverage with a Buy call and a price target of Rs 3,515, implying 15% upside from the last close of Rs 3,060.
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United Breweries: The beer category has significant headroom for growth, with 6–8% volume growth and low double-digit value growth achievable in a stable regulatory environment, analysts at JM Financial said. While competition is increasing, UBL remains the largest player, with a portfolio backed by strong brand recall. Its sustained dominance, with a 50% market share over decades, underscores its edge.
Margin pressures are easing due to stable input costs, better utilisation of old bottles, and supply chain optimisation. Near-term expansion may be gradual because of external challenges in Karnataka and Telangana, investments in new bottles for the premium portfolio (currently lower EBITDA per case), and capability enhancements. JM Financial has set a price target of Rs 1,990, implying an 11% upside from current levels.
Allied Blenders: Called the “dark horse” by Jefferies, Allied Blenders lagged peers with flattish volumes over FY19–25 and a 6% EBITDA CAGR, largely due to reliance on Officer’s Choice, a low-growth mass-premium brand. A strategic shift—including the IPO, reduced promoter salaries, and accelerated growth investments led by ICONiQ White Whisky—has improved performance.
P&A volumes are now growing in strong double digits, driven by ICONiQ White Whisky, while revenue has risen over 20% in the past two quarters, and EBITDA margin has improved to above 12% from 7% in FY24. Jefferies has assigned a price target of Rs 620, implying 12.3% upside from the last close of Rs 552.
JM Financial highlights that a highly regulated industry structure and complex supply chain create strong entry barriers, giving existing incumbents a competitive edge. Unlike staples or discretionary sectors, new entrants face limited competition-led threats.
With double-digit topline growth expected – Radico Khaitan 18%, Allied 12%, United Spirits 10% – and potential margin expansion, Jefferies argues that the Indian spirits sector offers robust growth prospects. Valuations remain in line with staples, suggesting sustainable profitability improvement.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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