Tilaknagar Industries Limited

Tilaknagar Industries reported a robust Q1 FY26, achieving a strong volume growth of 26.5% YoY. Net revenues increased by 31% YoY, or 20.5% when adjusted for a subsidy income of ₹38.6 crore. Adjusted EBITDA stood at ₹56 crore, marking a 25% YoY growth, with the EBITDA margin expanding by 55 basis points YoY to 15.1%. The company also highlighted its strong financial health by achieving a net cash level of ₹163 crore.

The company announced the signing of definitive agreements to acquire Pernod Ricard India's Imperial Blue business division for an enterprise value of approximately EUR 413 million. This consideration includes EUR 70 million for normalized working capital and EUR 28 million in deferred payments due by FY2030. This acquisition, currently awaiting regulatory approvals, is strategically significant, aiming to broaden Tilaknagar's product and geographical footprint and serve as a launchpad for its premium portfolio foray, with Imperial Blue being the 3rd largest Whisky brand in India by volume.

Tilaknagar Industries increased its stake in investee company Spaceman Spirits Lab to 21.36% from 12.98% through an investment exceeding ₹10 crore. This move is part of a broader strategy to leverage Tilaknagar's extensive distribution network to scale Spaceman Brands, including Samsara Gin, Sitara Rum, and Amara Vodka, across key Indian states and international markets. These premium brands are expected to be key growth drivers for the super-premium segment.

The company secured approval for a ₹59 crore investment to expand the bottling capacity of its wholly-owned subsidiary, Prag Distillery. This expansion is projected to increase capacity from 6 lakh cases to approximately 36 lakh cases per annum. Management expressed confidence that the expanded capacities will be operational within 12 months, anticipating benefits in bottling charges and logistics efficiency.

Tilaknagar Industries demonstrated strong market share gains across key states, particularly in the southern region. Karnataka, for instance, saw significant growth in the Prestige and Above segment, benefiting from excise duty reductions in the previous fiscal. The company's mass prestige portfolio, led by Mansion House and Courier Napoleon, continued its strong performance, with Mansion House Whisky also showing good traction in northeastern states, contributing to overall market share growth.

While the company achieved YoY EBITDA margin expansion, it experienced a QoQ decline from 16.6% in Q4 FY25 to 15.1% in Q1 FY26. This was primarily attributed to higher-than-usual legal costs associated with trademark litigation and slightly increased A&SP reinvestment rates. Despite this, input costs for ENA and Glass remained stable, and the company remains optimistic about a conducive input cost environment, with ongoing cost optimization initiatives expected to benefit COGS.

For FY26, Tilaknagar Industries projects mid to high teen revenue growth and an EBITDA margin in the range of 15%-16.5%. Looking further ahead to FY27, mid-teen revenue growth and EBITDA margins of 15.5%-17.5% are anticipated. The company expects its existing business EBITDA margins to reach 16%-17% or beyond in the long term. Volume growth for the current year is guided to be in the high teens, targeting closer to 14 million cases, with the Q1 volume of 3.2 million cases serving as the new quarterly base run rate.