Nomura Initiates Coverage on Allied Blenders with a ‘Buy’ Rating, Foreseeing Potential 20% Upside.

Allied Blenders & Distillers (ABD) is undergoing a pivotal transformation aimed at enhancing its market position beyond its established identity as a volume-driven liquor producer, particularly known for its Officer’s Choice brand. The company’s new strategy focuses on promoting its premium offerings, which is expected to foster significant growth. According to Nomura, this strategic overhaul is commendable, and they have initiated coverage on ABD with a ‘Buy’ rating and a target price of Rs 850, presenting a potential upside of nearly 20% from the current market price of Rs 708.80.

The shift in ABD’s product portfolio is substantial. The contribution of prestige and above (P&A) products expanded from 37% of volumes in FY24 to 47% in FY26, with an impressive value contribution of 57%. Nomura forecasts this trend to continue, expecting P&A volumes to represent over 50% by FY28, driven by the popularity of brands like ICONiQ White, which sold 10.7 million cases. Such premiumisation trends not only promise enhanced revenue but also a richer product mix, suggesting strong growth potential as consumers increasingly gravitate towards higher-priced offerings.

Key strategic initiatives are also underway to improve operational efficiency and cost control. ABD is enhancing its supply chain by increasing in-house production of extra neutral alcohol (ENA), aiming to significantly bolster its margins. Currently, the company fulfills 33% of its ENA needs through captive production and seeks to achieve 100% coverage with planned expansions. This, alongside strategic malt investments, positions ABD favorably for sustained profit growth and operational optimization. Nomura highlights promising margin improvements, with gross margins rising to 45.6% in FY26 from 37% in FY24.

Source: The Economic Times

(Expert Note: This intelligence brief was structured and verified by the Wealthova editorial desk.)