Buy Allied Blenders & Distillers, target price Rs 400: ICICI Securities

ICICI Securities has buy call on Allied Blenders & Distillers Ltd. with a target price of Rs 400. The current market price of Allied Blenders & Distillers Ltd. is Rs 335.8.

Investment Rationale
Allied Blenders and Distillers (ABD) is well positioned to capture premiumisation trend in alco-beverages industry via new product launches in P&A segment (ICONiQ White Whisky to double its volume YoY in FY25; launches in premium and luxury segments to drive realisation growth). Further, it has plans to drive profitable growth in Officer?s Choice Whisky by focus on improving state brand mix. Additionally, backward integration towards own ENA manufacturing, premiumisation and operating leverage may drive operating margin expansion (~170bps over FY25-27E). ICICI Securities' model revenue / EBITDA CAGR of 10%/30% over FY24-27E. Initiate coverage with BUY with a DCF-based target price of Rs 400. Key risks: (1) Potential ban or regulatory change in key states and (2) failure in scale-up of Prestige & Above (P&A) segment.

Promoter/FII Holdings
Promoters held 80.91 per cent stake in the company as of 30-Sep-2024, while FIIs owned 2.83 per cent, DIIs 4.12 per cent.