Shares of alcobev firms Radico Khaitan and Allied Blenders gained up to 3% on September 15 after global brokerage firm Jefferies began covering the stocks with a "buy" rating.
Jefferies expects these companies to post strong double-digit annual growth in revenue and sees significant potential for profit margin expansion, according to CNBC-TV18. The firm noted that alcohol companies benefit from growth driven by premium product offerings.
Jefferies' thumbs up
Jefferies also started coverage on United Spirits, setting a price target of Rs 1,570—about 20% higher than its closing price on September 12. The brokerage views the stock as attractive following a more than 20% decline in its price, CNBC-TV18 reported. While United Spirits may face short-term headwinds due to a recent liquor tax hike in Maharashtra, Jefferies projects a 13% compound annual growth in earnings per share between FY25 and FY28. For Radico Khaitan and Allied Blenders and Distillers, Jefferies set price targets of Rs 3,590 and Rs 620, respectively—suggesting potential gains of 25% and 14% from their September 12 closing prices.
As of 11:25 am on September 15, Radico Khaitan shares were up 2% at Rs 2,931.7 on the NSE, while Allied Blenders' stock rose 3% to Rs 563.
What also aided the bullish sentiment for Radico Khaitan is the company’s launch of luxury vodka “The Spirit of Kashmyr” in Maharashtra and Goa markets.
Why Jefferies likes alcohol industry
Jefferies also highlighted that India’s spirits industry is large and protected by complex state-level regulations, which create high entry barriers and give existing players a competitive advantage. Though overall sector growth is moderate—typically in the mid- to high-single-digit range—the premium segment targeted by most listed companies is growing at a much faster pace. Scotch whisky and white spirits, in particular, are expanding rapidly at annual growth rates of 15–20%, Jefferies noted.
The brokerage also observed regulatory improvements in several states, including reduced taxes on premium products and moves toward retail privatization. However, it cautioned that risks remain—such as unfavorable policy changes in major states, possible drops in consumer demand, and rising input costs for items like extra neutral alcohol and glass.
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