Shares of India’s top alcohol producer and the third-largest spirit company surged 3% after the brokerage increased the target price, projecting a 33% upside.
On Thursday’s early trade, Allied Blenders & Distillers Ltd was trading at ₹344.95 per share, up 3% from the previous close price on the National Stock Exchange. The company has a market capitalization of ₹9,480 crores.
Allied Blenders and Distillers, an Indian-made foreign liquor manufacturer, produces and sells whiskey, brandy, rum, and vodka. The company’s top brands include Officer’s Choice Blue Whisky, Jolly Roger Rum, and Sterling Reserve Blend 7 Whisky.
Allied Blenders and Distillers is the third-largest Indian-made foreign liquor (IMFL) company by annual sales volumes from FY14 to FY22 with 11.8% market share in the Indian whisky market in FY23.
On July 2, 2024, shares of Allied Blenders and Distillers Ltd. were listed on Dalal Street with a premium of 14%. The stock debuted at ₹320 on the NSE, reflecting a 13.88% premium, and at ₹318.10 on the BSE, compared to the issue price of ₹280.
Also read
Allied Blenders & Distillers Ltd. raised ₹449 crore from institutional investors through the anchor book on June 24. Participants included Goldman Sachs, Societe Generale, Nippon Life India, LIC Mutual Fund, BNP Paribas, and 360 One Special Opportunities Fund, among others.
The quota for retail investors was subscribed 4.51 times, while non-institutional investors subscribed 32.40 times.
As of FY24, the company generates 96% of its revenue from selling whisky, 2.6% from brandy, 1.14% from rum, and 0.12% from vodka.
From FY21-22 to FY22-23, the company experienced a significant 17% revenue increase, rising from ₹2,686 crores to ₹3,147 crores. Net profit also saw a remarkable 100% growth, doubling from ₹1 crore to ₹2 crores during this period. As of December 2023, the company’s total debt stood at approximately ₹808 crores.
Sharekhan, a domestic brokerage, has recommended a buy rating with a target price of ₹450 per share, suggesting a potential upside of 33% from the current price of ₹338.85 per share, as reported by CNBC TV 18.
Sharekhan emphasized that Allied Blender’s earnings growth is set to strengthen as it suppports its balance sheet by repaying debts and prioritizing premium products. This enhancement is projected to reduce the valuation difference compared to its industry peers within the next two to three years.
Sharekhan also noted that Allied Blenders is currently trading at an Enterprise Value to EBITDA multiple of 27 times for FY2025 and 22 times for FY2026, respectively, which represents a discount compared to its closest peers.
“We are initiating coverage on Allied Blenders and Distillers with a positive outlook, setting a price target of ₹450. This valuation is based on a target multiple of 40 times its earnings per share (EPS) estimate for FY2026, reflecting a 20% discount to Radico Khaitan’s target multiple of 50 times,” Sharekhan stated.
The brokerage further emphasized in its report that it anticipates Allied Blender’s earnings to experience significant growth as the company reduces its debt and focuses on premiumization in the medium to long term.
Written by Omkar Chitnis
Disclaimer
The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Dailyraven Technologies or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
