ICICI Securities research report on Allied Blenders and Distillers
ABD reported strong volume-led performance with driven by 44% growth in P&A segment, increasing its volume/ value saliency to 46%/ 56% from 37%/ 46% last year. We believe the volume performance was partly aided by the reopening of Andhra Pradesh and Delhi markets. Management continues to focus on scaling up its premium & luxury segment through NPD and expanding key brands (ICONiQ White). Gross margin expanded by 448bps YoY to 43.2% driven by favourable product and state mix, while EBITDA margin expansion was restricted to 231bps YoY to 12.1% on account of higher investment behind brands. Net debt stood at INR 7.54bn (marginal reduction from INR 7.66bn in Mar’25). Going ahead, the key monitorable would be free cash flow generation and thereby reduction in debt. Maintain BUY.
Outlook
We increase our estimates by marginally and model revenue/ EBITDA/ PAT CAGRs of 12%/18%/28%, over FY25-27E. Maintain BUY with a DCF-based revised target price of INR 580 (vs INR 550 previously).
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