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News Topical, Digital Desk : Global brokerage firm Jefferies has given a positive outlook on Indian liquor companies United Spirits, Radico Khaitan and Allied Blenders. The report says that due to the premiumization trend, the prestige & above (P&A) category is witnessing strong growth, which is likely to continue in the future. The brokerage estimates that these three companies will register double digit topline growth in the coming years. In its latest report, Jefferies has initiated coverage on all three stocks and given 'Buy' rating to all.
Radico Khaitan Top Pick
Radico Khaitan has been ranked as a Top Pick by the brokerage. The brokerage expects the company to post the fastest EPS CAGR of 35 per cent during FY25–28E and maintain its premium valuation due to improving RoCEs. The brokerage has set a target price of ₹2800 for Radico, which is about 25 per cent upside from its current closing price.
Buy rating on United Spirits-Allied Blenders The target price is ₹1315 for United Spirits and ₹620 for Allied Blenders, indicating a potential upside of 19 per cent and 18 per cent respectively. United Spirits faces short-term challenges such as a tax hike in Maharashtra, but the correction of over 20 per cent has already been factored into the stock price, the report said. The company can deliver 13 per cent EPS CAGR during FY25–28E. Allied Blenders has been described as a dark horse and it has been said that the company's turnaround journey continues and the premium brand portfolio will strengthen it. Currently, the contribution of the P&A segment to the revenue of the companies varies. United Spirits (88%), Radico Khaitan (69%) and Allied Blenders (47%) are included in this.
Where will the growth be found According to Jefferies, Radico will get the fastest 18 percent CAGR from the expansion of the vodka category and luxury portfolio. Allied Blenders is expected to have a 12 percent topline CAGR, which will be supported by the recovery of its new brands (ICONiQ White, Shrishti Whiskey), super-premium portfolio (ABD Maestro) and legacy brands (Officer's Choice Blue, Sterling Reserve). On the other hand, United Spirits is definitely challenged by tax hikes, but due to its strong positioning in the luxury and super-premium segments, it is expected to register double-digit CAGR in FY25–28E.
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