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Hidden Gem: Allied Blenders & Distillers

ICICIdirect Research 07 Feb 2025 DISCLAIMER

Allied Blenders & Distillers (ABDL), incorporated in 1988, is third largest IMFL company in terms of sales volumes between FY14-22. It has 17 IMFL brands in the portfolio; 4 out of it are
Millionaire brands. Officer Choice is 3rd largest selling whisky brand globally.

Prestige & Above (P&A) category products are gaining strong traction in the domestic market due to premiumisation trend across the value chain. New product addition and distribution aided P&A contribution to increase to 37% in FY24 from 25% in FY18. The company expects the contribution of P&A category to increase to 50% by FY27.

Iconiq White Whisky clocked volumes of 2.3mn cases in FY24 and expected to double it to 4-4.5mn cases in FY25. This along with opening of Andhra Pradesh market and strong traction to new launches in the premium and luxury segments through organic and inorganic initiatives will aid P&A category volumes to grow at CAGR of 13% over FY24-27.

Overall the company’s revenues are expected to grow at CAGR of 9% over FY24-27.
Company’s EBIDTA margins hit the bottom in FY23 at 5.9% and improved to 7.3% in FY24 on back of improved mix and several cost saving initiatives. We expect margins to improve by ~510 bps over FY24-27E nearing to 13% in FY27E on back of premiumisation. EBIDTA to grow at CAGR of 32% over FY24-27E.

Clearance of overdue from the state of Telegana of Rs 400crore will help to reduce short term debt on the books in the coming years.

Consistent reduction in debt through improved cashflows, strong growth in EBIDTA and reduction in the interest cost will help PAT to grow multi-fold in the coming years.

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