India’s alcohol stocks are riding high as fundamentals get stronger by the quarter. A stellar March quarter performance across the board has poured fresh optimism into the alco-beverage space, with analysts raising a toast to what they believe could be sustained earnings momentum and margin expansion heading into FY26.
Brokerages tracked by Bloomberg see room for up to 60 percent upside in select alco-bev stocks over the next 12 months, even though the sector has been in a consolidation phase over the last couple of months.
Over the past year, companies such as United Spirits, Radico Khaitan, Globus Spirits, United Breweries, Som Distilleries, and Tilaknagar Industries have delivered gains ranging between 30 to 60 percent. Even as the rally took a breather from January onwards, mutual funds upped their stakes in several of these stocks during the March quarter, encouraged by valuations that have cooled off from their five-year historical averages.
According to Pankaj Kumar, Vice-President of Fundamental Research at Kotak Securities, the sector is expected to benefit from ongoing premiumisation trends, easing input costs, and supportive regulatory shifts.
“Most of the Indian alcobev stocks, particularly IMFL players, have performed well due to a shift towards premium products, a favourable regulatory environment, and a stable input cost backdrop,” he noted. He sees healthy volume growth and margin expansion in FY26, and maintains an “add” rating on United Spirits and Radico Khaitan.
Cheers to premiumisation
What’s driving the real buzz is the Indian consumer’s growing taste for the finer pour. The March quarter showed a clear tilt toward premiumisation, especially in the Prestige & Above (P&A) IMFL segment, where growth outpaced mass-market brands by 2–3 times. This shift pointed to a structural change in consumption habits, underpinned by rising incomes and evolving preferences.
According to a report by Crisil Ratings, the industry is expected to see 8 to 10 percent revenue growth in FY26, reaching Rs 5.3 lakh crore, buoyed by the premiumisation trend and robust demand. This follows a strong 13 percent CAGR over the last three years and analysts are confident that any moderate rise in input costs will likely be absorbed by pricing power and volume growth.
India-UK FTA: a potential buzzkill?
Despite the largely upbeat outlook, one headwind looms — the recently signed free trade agreement (FTA) between India and the UK. The deal proposes slashing tariffs on UK-made whisky and gin from 150 percent to 75 percent, which could potentially drop retail prices on some imported spirits by 20–22 percent. For Indian brands, this could mean facing pricing heat, especially in the high-end segment.
Kotak’s Pankaj Kumar noted that while the FTA may lower input costs for companies that import bulk scotch, it also raises the risk of market share loss to international brands. “It remains to be seen how this will impact profitability, given the potential rise in competition from foreign scotch whisky labels,” he said.
Brokerages are divided on how this trade dynamic will play out.
Citi remains upbeat on United Spirits, citing long-term strength from its premium segment strategy. However, Investec views the FTA as a double-edged sword.
Investec estimates Radico Khaitan margins to expand thanks to cheaper bulk imports, but also flagged risks to its super-premium portfolio, which accounts for about 10 percent of IMFL revenue.
Currently, Globus Spirits trades at 9.3x price-to-earnings (PE) ratio FY26E, lowest amongst peers, while United Breweries trades at the highest - 115x PE ratio FY26E.
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