Allied Blenders and Distillers Limited — Q1 FY26 earnings call

Call held 30 Jul 2025

Management summary

Allied Blenders delivered a strong Q1 FY26 performance, marked by robust revenue and EBITDA growth, driven by premiumization and operational efficiencies. The company is progressing well with its backward integration projects and expanding its premium portfolio and international presence. While facing some uncertainties regarding state-level policies and initial investment phases for new ventures, management remains focused on driving profitable growth and margin expansion.

Highlights

  • Consolidated income from operations reached ₹930 crores, representing a 22.5% increase over the same period last year.

  • EBITDA grew at 56.4% year-on-year to ₹119 crore, with EBITDA margin expanding to 12.8%, an improvement of 277 basis points.

  • Profit after tax for the quarter surged 5x to ₹56 crores as compared to ₹11 crores in Q1 FY25.

  • The P&A portfolio volume growth was 46.9%, increasing its overall salience to 46.2% in volume terms and 55.8% of sales value.

  • Net debt marginally reduced to ₹754 crores as of June '25 from ₹766 crores as of March '25, improving net debt to equity to 0.47x and net debt to EBITDA to 1.5x.

Concerns

  • The impact of the Maharashtra tax hike on consumer behavior and margins is yet to be fully understood, pending the MML policy announcement.

  • Overdue receivables from Telangana state continue, with clarity expected only after the Panchayat elections in August.

  • New premium brands and ABD Maestro are in an investment phase for the first two years and are not expected to contribute to EBITDA during this period.

Key financials

  1. Income from Operations ₹930 Cr +22.5%YoY
  2. EBITDA ₹119 Cr +56.4%YoY
  3. EBITDA Margin 12.8%
  4. PAT ₹56 Cr +400%YoY
  5. Volume 8.5 million cases +17.2%YoY
  6. Gross Margin 43.2%

What they filed

Q1 FY27: revenue up 5.5%, net profit up 11.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue868 974 921 919 984 +13%985 +1%993 +8%970 +6%
EBITDA104 117 136 115 132 +27%147 +26%181 +33%134 +17%
Net profit48 58 81 61 72 +50%78 +34%57 −30%68 +11%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Capital allocation

high confidence
  • Capex ₹525 Cr
    • PET manufacturing facility in Telangana
    • Single malt distillery
    • ENA Distillery in Aurangabad (acquired Dec '24)
    Our Rs. 525 crore CAPEX program is progressing well, and we are on track. The PET manufacturing facility in Telangana is on track for commissioning in Q2 FY '26. We expect the commercial operation to start from September '25. The margin accretive benefits would start flowing in line with the expectation. The single malt distillery is progressing well towards a Q4 FY '26 launch in commercial operations. We will witness margin accretive benefits to start flowing from April 2026 onwards. The ENA Distillery in Aurangabad acquired in December '24 commenced operation in February 2025 and is currently operating at 100% capacity.
  • Debt Net ₹754 Cr · 1.5× EBITDA
    We generated free cash flow, which helped in marginal reduction in our net debt to Rs. 754 crores as on 30th June '25, as compared to Rs. 766 crores as on 31st March'25. This led to a marginal improvement in net debt to equity to 0.47x in June '25 as compared to 0.49x in March '25, and net debt to EBITDA to 1.5x in June '25 as compared to 1.7x in March '25.
  • M&A Russian Standard Vodka Joint venture · Closed

    Expansion into Super-Premium and Luxury vodka segment

    We also expanded into the Super-Premium and Luxury vodka segment with launch of Russian Standard Vodka through a partnership with Roust Corporation.
  • Liquidity Liquidity disclosed EBITDA generated this year should be more than sufficient to meet the entire growth capital requirement for the business and will leave free cash on the table.
    I think, operations, the EBITDA that we generate this year should be more than sufficient to meet the entire growth capital requirement for the business. In fact, it will leave free cash on the table. So, the only reason we may need to borrow is for our projects that we have already discussed.

Guidance & targets

Profitability

  • EBITDA Margin Profitability · next 3 years · High confidence 15%
    So, I think let's put it this way. We are currently, let's say, at about 13% EBITDA margin. There are two big levers of margin expansion. One is FTA, which, let's say, Q4 of this financial year should come into play. That itself should add about 200 basis point margin improvement.

    — Alok Gupta

  • EBITDA Margin Improvement from Backward Integration Profitability · from Q4 FY27 onwards · High confidence 300 bps
    As already stated, these backward integration initiatives are margin accretive and are expected to support approximately 300 basis points of EBITDA margin improvement from Q4 FY ‘27 onwards.

    — Alok Gupta

  • EBITDA Margin Improvement from UK FTA Profitability · from Q4 FY26 · High confidence 200 bps
    One is FTA, which, let's say, Q4 of this financial year should come into play. That itself should add about 200 basis point margin improvement.

    — Alok Gupta

Portfolio Mix

  • P&A Salience (Volume) Portfolio Mix · near term · Medium confidence 50%

    From 46% today

    So, we continue to grow the way we are growing, and especially with the addition of Golden Mist and roll out of Srishti in many markets, we should be looking at closing down the gap between 46% and 50%.

    — Alok Gupta

Market Share

  • ABD Maestro Market Share in Super-Premium/Luxury Market Share · next couple of years · Medium confidence High single-digit to double-digit
    So, I think the way we are looking at is that of this 20 million cases, if we can get a high single-digit market share over the next two or three years, we will be in a good space, right?

    — Alok Gupta

Cost Savings

  • Annualized Savings from PET Project Cost Savings · annualized · High confidence North of 30 crores
    The PET project alone, the annualized addition should be north of 30 crores.

    — Alok Gupta

International Expansion

  • Export Footprint (Number of Countries) International Expansion · by year-end · High confidence 33 to 35 countries

    From 27 countries today

    We are already operating in 27 countries, and we are looking at expanding our footprint further. So, from 17 countries in FY '24, by end of the year, we are looking at least a 2x increase, which means at least 33 to 35 countries where we start exporting.

    — Alok Gupta

What to watch in Q2 FY26

Maharashtra MML policy announcement and market impact

next quarter
Current Uncertain, old/new MRP stocks in market
Target Clarity on policy and initial consumer response

Why it matters

The MML policy will significantly influence pricing, volumes, and margins in a key state.

So, I think by 7th and 10th of August, we will start getting the retail order in terms of what's happening to consumer behavior. Anything that I tell you right now will hold no good because it is a mix situation, old MRP, new MRP.

Risks & concerns

  • Uncertainty regarding Maharashtra MML policy and tax hike impact

    medium

    The full impact of the Maharashtra tax hike on consumer behavior and margins is unclear, pending the announcement of the MML policy.

    Analyst acknowledged

  • Delay in Telangana overdue receivables

    medium

    Overdue receivables from Telangana state continue, with normalization anticipated only after the Panchayat elections in August.

    Analyst acknowledged

  • New premium brands and ABD Maestro in investment phase

    low

    New premium brands and the ABD Maestro subsidiary are in an investment phase for the first two years and are not expected to contribute to EBITDA during this period.

    Management acknowledged

Q&A highlights

4 direct
Impact of Maharashtra tax hike on consumer behavior and margins Partial
As regards Maharashtra, I think most of the marketers have passed on the tax incident to the customer, some reduction in the margin. And by and large, all the key competitors, the key players have tried to retain and protect their margins and minimize margin losses wherever they could.

This question addresses a significant regulatory change in a key state, and management indicates uncertainty about the full impact pending further policy clarity.

Asked by Abneesh Roy

Volume contribution from AP and Delhi reopening Direct
So, just to answer your first question that if you were to take Delhi and Andhra out versus the 17% volume growth, our growth would have been about 13%.

Quantifies the impact of market reopenings on overall volume growth, showing that underlying growth ex-these states is still robust at 13%.

Asked by Kunal Shah

Profitability timeline and OPEX for ABD Maestro Partial
So, the brands that are part of the ABDM, which are luxury brands, we are, for the next two years, following a very simple thumb rule that they need to be whatever money they make at a contribution level, we will reinvest in the brand. And therefore, the only expenses that will come is towards running the organization. And Year 3 is when the brand or the business will become EBITDA positive.

Clarifies the investment phase for new premium brands under ABD Maestro, indicating no EBITDA contribution for the first two years, which is crucial for short-term profitability expectations.

Asked by Kunal Shah

Outlook for ICONIQ White's volume growth Direct
No, the brand continues to grow. It is on a very strong wicket. We are seeing quarter-on-quarter growth. And I will just request what is the Q1 number for ICONIQ? So, just to answer your first question that if you were to take Delhi and Andhra out versus the 17% volume growth, our growth would have been about 13%. So, that is the contribution of Delhi and Andhra in the overall growth.

Provides an update on the performance of a key growth brand, indicating continued strong momentum despite its rapid initial growth.

Asked by Kunal Shah

Status of Telangana overdue receivables Partial
It is status quo in Telangana. So, regular payments are being released. Overdue, very tiny portion was released in the month of April and May, but June and July, we have not seen release of any overdue payment.

Highlights an ongoing working capital challenge and links its resolution to a specific political event (Panchayat election), providing a timeline for potential improvement.

Asked by Sanjay Manyal

Contribution of new brands (Woodburns, Golden Mist, Srishti) to scale and margin Direct
So, I think we are excited about all new brands. However, if you were to pick brands that can give us scale in terms of volume and are also high margin, then I would say Woodburns is a brand we are extremely excited about. It is a Rs. 3,000 MRP product. It is what I call a daily affordable luxury, which is Rs. 100 a day kind of a thing.

Identifies specific new brands with high potential for scale and margin, offering insights into the company's future growth drivers beyond existing flagship products.

Asked by Kaustubh Pawaskar

Timeline for full EBITDA benefit from backward integration Direct
You are absolutely right. The full benefit will come, the full benefit will accrue from Q4 FY '27. Partial benefit from our ENA distillery in Minakshi in Maharashtra have already started to accrue, and the PET project will start in September '25. So, that benefit will start accruing. And by Q4, FY '26, our single malt distillery will be up and running. So, benefits will start accruing. We will start seeing EBITDA, positive EBITDA impact starting Q2 FY '26, and it will scale up gradually, but the full impact will be visible to us in Q4 FY '27.

Provides a clear, phased timeline for the realization of benefits from major CAPEX projects, crucial for modeling future margin expansion.

Asked by Kaustubh Pawaskar

Status of Rock Paper Rum investment Partial
No. We have not made any investment in the business so far. Like I said, I think just we just got busy with our Q1 operations, and therefore, it just, you know, we felt that let's just right now put all our energy behind getting Q1 off on a good start and depending closure and the investment thereof, we will focus in Q2 now.

Reveals a delay in a previously approved investment, indicating management's prioritization of core Q1 operations over new ventures in the immediate term.

Asked by Nikhil Gupta

3 min read 7 chapters

Detailed narrative

Strong Q1 FY26 Performance Driven by Premiumization

Allied Blenders reported a robust Q1 FY26, with consolidated income from operations growing 22.5% year-on-year to ₹930 crores. EBITDA saw a significant increase of 56.4% year-on-year, reaching ₹119 crores, and the EBITDA margin expanded by 277 basis points to 12.8% from 10% in Q1 FY25. Profit after tax surged five-fold to ₹56 crores, demonstrating strong operational leverage. This performance was underpinned by a 17.2% volume growth to 8.5 million cases and a 6.2% increase in realization per case, driven by a favorable product mix.

Accelerated Premiumization and Portfolio Diversification

The company's premiumization strategy is yielding results, with the P&A portfolio volume growing 46.9% and increasing its salience to 46.2% in volume terms (from 36.9% in Q1 FY25) and 55.8% of sales value (from 46.1% in Q1 FY25). New offerings like Golden Mist, a prestige brandy launched in Karnataka and Telangana, and the partnership for Russian Standard Vodka, are expanding the company's presence in the high-growth Super-Premium and Luxury segments. This segment, currently 12 million cases, is expected to double to over 20 million cases in the next four years, with ABD Maestro targeting a high single-digit to double-digit market share.

Strategic Backward Integration Projects on Track

Allied Blenders' ₹525 crore CAPEX program is progressing as planned, with key backward integration initiatives nearing completion. The PET manufacturing facility in Telangana is on track for commissioning in Q2 FY26 (September '25), expected to yield over ₹30 crores in annualized savings. The single malt distillery is progressing towards a Q4 FY26 launch, with margin accretive benefits anticipated from April 2026. The ENA Distillery in Aurangabad, acquired in December '24, commenced operations in February '25 and is currently running at 100% capacity, with regulatory approvals for expansion underway. These initiatives are collectively expected to contribute approximately 300 basis points to EBITDA margin improvement from Q4 FY27.

Improved Working Capital and Debt Profile

The company demonstrated strong working capital management, leading to a reduction in overall net working capital. This, combined with robust profit performance, generated free cash flow, enabling a marginal reduction in net debt from ₹766 crores in March '25 to ₹754 crores in June '25. Consequently, the net debt to equity ratio improved from 0.49x to 0.47x, and net debt to EBITDA improved from 1.7x to 1.5x, indicating a healthier financial position.

Market Expansion and Brand Strengthening Initiatives

Allied Blenders is aggressively expanding its market reach, with its global footprint growing from 14 to 27 countries, targeting 33-35 countries by year-end. Domestically, the company is focusing on strengthening its core brands; Officer's Choice, the #1 Indian Mass Premium brand, is undergoing innovation, while Officer's Choice Blue is seeing a ramp-up in volumes in reopened markets like Delhi. The company is also focusing on driving trials for Sterling Reserve B7 and expanding its presence in the CSD channel with Kyron and SR B10.

Navigating Regulatory and Market Challenges

The company acknowledges the uncertainty surrounding the impact of the Maharashtra tax hike on consumer behavior and margins, as the full MML policy is yet to be announced. Additionally, overdue receivables from Telangana state remain a concern, with only a tiny portion released in April and May, and no further releases in June and July. Management anticipates clarity and potential normalization of these receivables after the Panchayat elections in August, which will allow the government to re-engage on industry-level issues.

Future Margin Expansion and Investment Outlook

Management projects a gradual improvement in EBITDA margin, targeting 15% within the next three years from the current 13% (TTM). This will be driven by two main levers: a 200 basis point improvement from the UK FTA starting Q4 FY26, and the 300 basis points from backward integration by Q4 FY27. The company is also investing significantly in brand building (75-100 bps increase in A&P as % of NSV this year and next), ABD Maestro, and technology infrastructure (ECC to HANA migration), with the first two years for new premium ventures being investment-heavy before they contribute to EBITDA.

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