Nomura initiates coverage on Allied Blenders with Buy rating, sees up to 20% upside

Allied Blenders & Distillers is looking to move beyond its traditional image as an Officer’s Choice-led liquor company. Its strategy is no longer just about selling more bottles but also about steering consumers towards higher-priced brands while gaining greater control over its production.

Nomura sees this strategic shift as a key growth driver for Allied Blenders & Distillers, initiating coverage on the stock with a Buy rating and a target price of Rs 850. The target implies an upside of nearly 20% from the current market price of Rs 708.80.

However, the shares were trading 1.94% lower on Tuesday.


Also Read | India’s IPO pipeline hits Rs 3.86 lakh crore, 3.5 times funds raised in 2026: Report

From mass-market appeal to premium brands

For years, Officer’s Choice has been the backbone of Allied Blenders’ business. However, its growing premium portfolio is gradually reshaping the company’s product mix, according to Nomura.

Prestige & Above (P&A) products accounted for 47% of volumes in FY26, up from 37% in FY24, and contributed 57% of value. The brokerage house expects their share of volumes to cross 50% by FY28.

Also Read:Jefferies names Max Financial as its top insurance pick, sees 41% upside despite target cut

A key growth driver has been ICONiQ White, which sold 10.7 million cases in FY26. Allied Blenders is also expanding its premium and luxury portfolio with brands such as Sterling Reserve, ABD Maestro, Woodburns, Arthaus, Zoya, Kyron and Golden Mist.

The shift is more than just adding new brands. As consumers move towards higher-priced products, premiumisation can drive growth through a richer product mix. Nomura expects P&A volumes to grow at a CAGR of 16% over FY26–FY29, while mass-premium volumes are expected to recover after several years of decline.

Also Read: HDFC Bank CEO transition nears; Jefferies sees rerating scope, sets target at Rs 880

Less visible part of the transformation

Allied Blenders is also bringing more of its supply chain in-house through investments in extra neutral alcohol (ENA), malt and PET packaging, aiming to improve cost control and supply security.

ENA is a key raw material for its whisky portfolio. The company currently meets 33% of its ENA requirements through captive production and aims to take this to 100% through capacity additions in Aurangabad and Moradabad. Nomura sees this as a key structural margin lever.

Malt investments, meanwhile, are aimed at securing supplies for premium brands and supporting the planned entry into single malt, rather than delivering immediate cost savings.

The strategy is already yielding results, with gross margins rising from 37% in FY24 to 45.6% in FY26, while EBITDA margins expanded from 7.3% to 13.8%. Nomura expects further improvement as new capacity comes on stream.

Amar Sinha took over as managing director in June 2026, succeeding Alok Gupta, with a focus on profitable volume growth, premiumisation, cost optimisation and backward integration.

Nomura forecasts a 26% CAGR in EPS over FY26–FY29 and values the stock at 48 times September 2028 earnings. Key risks include execution delays and a slower shift towards premium products.

Disclaimer: This article has been written by Sakshi Kumari, who is not a SEBI-registered Research Analyst or an Investment Adviser. Sakshi Kumari and her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.