Brokerage firm Jefferies has initiated coverage on India's alcoholic beverages sector with a positive view on Radico Khaitan and Allied Blenders & Distillers (ABDL), while maintaining a more cautious stance on United Spirits.Jefferies has assigned a 'Buy' rating on Radico Khaitan with a price target of ₹4,500 and on Allied Blenders with a target price of ₹780.
It has initiated coverage on United Spirits with a 'Hold' rating and a target price of ₹1,560.The brokerage believes premiumisation remains the biggest structural growth driver for the sector, although the pace of growth is likely to vary across companies.Jefferies expects Radico Khaitan, its top pick in the sector, and Allied Blenders to deliver mid-teen volume growth in their premium portfolios over FY26-29, driven by product innovation, stronger execution and an expanding premium mix.In contrast, it expects United Spirits to report a relatively modest 6% volume CAGR and 12% EPS CAGR during the same period, given that nearly 85% of its portfolio is already premium.The brokerage expects Radico Khaitan and Allied Blenders to outperform United Spirits over the next few years.
Between FY22 and FY26, both companies outpaced larger peers through strong execution and new product launches, recording premium and above (P&A) volume CAGR of 14-21%, compared with 2-6% for United Spirits and Pernod.Jefferies believes both Radico and Allied Blenders have a longer runway for premiumisation-led growth as premium products still account for less than half of their portfolios.It projects premium portfolio volume CAGR of 18% for Radico and 14% for Allied Blenders over FY26-29.
United Spirits, with an already high premium mix, is expected to witness slower growth.For Radico Khaitan, Jefferies cited continued innovation in high-growth categories such as vodka, gin and Indian single malts, along with strong execution and brand-building, as key drivers for an estimated 22% EPS CAGR over FY26-29.On Allied Blenders, the brokerage said the company has steadily improved execution since its IPO and is transitioning into a premiumisation-led growth story.
It expects product mix improvements and backward integration to drive margin expansion of more than 300 basis points, resulting in an estimated 30% EPS CAGR over FY26-29.For United Spirits, Jefferies believes the company's premium and luxury portfolio remains a key strength, supported by Diageo's global brands.However, it said the current valuation leaves limited room for upside, with future earnings upgrades largely dependent on the successful turnaround of the McDowell's franchise.
Brokerage firm Jefferies has initiated coverage on India's alcoholic beverages sector with a positive view on Radico Khaitan and Allied Blenders & Distillers (ABDL), while maintaining a more cautious stance on United Spirits.Jefferies has assigned a 'Buy' rating on Radico Khaitan with a price target of ₹4,500 and on Allied Blenders with a target price of ₹780. It has initiated coverage on United Spirits with a 'Hold' rating and a target price of ₹1,560.The brokerage believes premiumisation remains the biggest structural growth driver for the sector, although the pace of growth is likely to vary across companies.Jefferies expects Radico Khaitan, its top pick in the sector, and Allied Blenders to deliver mid-teen volume growth in their premium portfolios over FY26-29, driven by product innovation, stronger execution and an expanding premium mix.In contrast, it expects United Spirits to report a relatively modest 6% volume CAGR and 12% EPS CAGR during the same period, given that nearly 85% of its portfolio is already premium.The brokerage expects Radico Khaitan and Allied Blenders to outperform United Spirits over the next few years. Between FY22 and FY26, both companies outpaced larger peers through strong execution and new product launches, recording premium and above (P&A) volume CAGR of 14-21%, compared with 2-6% for United Spirits and Pernod.Jefferies believes both Radico and Allied Blenders have a longer runway for premiumisation-led growth as premium products still account for less than half of their portfolios.It projects premium portfolio volume CAGR of 18% for Radico and 14% for Allied Blenders over FY26-29. United Spirits, with an already high premium mix, is expected to witness slower growth.For Radico Khaitan, Jefferies cited continued innovation in high-growth categories such as vodka, gin and Indian single malts, along with strong execution and brand-building, as key drivers for an estimated 22% EPS CAGR over FY26-29.On Allied Blenders, the brokerage said the company has steadily improved execution since its IPO and is transitioning into a premiumisation-led growth story. It expects product mix improvements and backward integration to drive margin expansion of more than 300 basis points, resulting in an estimated 30% EPS CAGR over FY26-29.For United Spirits, Jefferies believes the company's premium and luxury portfolio remains a key strength, supported by Diageo's global brands.However, it said the current valuation leaves limited room for upside, with future earnings upgrades largely dependent on the successful turnaround of the McDowell's franchise.
