Buy Associated Alcohols; target of Rs 1300: Choice Equity Broking

Choice Equity Broking's report on Associated Alcohols

AAB commissioned its 6,000 LPD malt plant in October 2025, marking a key milestone in its premiumisation and integration strategy. The facility strengthens AAB’s valuecreation framework in premium aged spirits and positions it for the launch of its Single Malt Whisky. Located within the 150-acre Barwaha complex, the malt plant is expected to enhance quality control, cost-efficiency and backward integration, supporting AAB’s focus on premium and export-led growth. Premium Momentum amid Realignment: AAB’s IMFL Proprietary volumes rose 37% YoY, while Licensed IMFL declined 38% due to business realignment with Inbrew as focus shifts to higher-margin proprietary brands. Despite margin pressure from input mix and lower byproduct realisation, upcoming RTD, Tequila and Brandy launches strengthen growth visibility. View and Valuation: Q2FY26 was a non typical quarter, marred by input cost pressure and changing product mix.

Outlook

However, AAB showed strong resilience in the P&A segment. We, therefore, maintain our estimate for FY26E/FY27E. Hence, we maintain our TP of INR 1,300 using the DCF methodology. Our TP implies an FY27E/FY28E PE of ~26x/23x.