Allied Blenders and Distillers Ltd (ABDL) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day. You all have been connected to Allied Blenders and Distillers Limited Q2 FY '27 results conference call. The call will begin shortly. Please stay connected.
Moderator: Ladies and gentlemen, good day, and welcome to Allied Blenders and Distillers Limited Q2 FY '27 results conference call hosted by Antique Stock Broking Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. I now hand the conference over to Mr. Abhijit Kundu. Thank you, and over to you, sir.
Abhijit Kundu (Antique Stock Broking Limited): Thank you. It is our absolute pleasure to host the management of Allied Blenders and Distillers Limited for the Q2 FY '27 results con-call. Over to Mr. Mukund, Head of Investor Relations, for further proceedings. Thank you.
Mukund (Allied Blenders and Distillers Ltd): Thanks, Abhijit. Good evening, everyone, and thank you for joining our Q2 FY '27 results conference call. I hope you've received a copy of our results presentation. I would like to urge you to go through this along with the disclaimer slides. Today, we have with us from the management of ABD, Mr. Shekhar Ramamurthy, Executive Deputy Chairman; Mr. Alok Sinha, Managing Director; Mr. Ramakrishnan Ramaswamy, Chief Financial Officer. Now, I would like to hand over the call to our MD, Mr. Alok Sinha, who will give you the summary of the company's quarterly performance before we open up for Q&A. Over to you, Alok.
Alok Sinha (Allied Blenders and Distillers Ltd): Thank you, Mukund. Good evening, everyone, and thank you for joining us today for ABD's Q2 and H1 FY '27 earnings call. In the first half of FY '27, ABD has continued to build a stronger, a sharper operating model and a clear focus on building a future-ready spirits company. Our priorities remain consistent: premiumization-led growth, stronger consumer engagement, disciplined execution and backward integration, and prudent capital allocation. Q2 FY '27 performance overview: on a consolidated basis, income from operations stood at 1,152 crore, reflecting growth of 15.8% year-on-year and 17.1% quarter-on-quarter. Q2 FY '27 marks an important milestone for ABD with quarterly volumes crossing 10 million cases for the first time,
Alok Sinha (Allied Blenders and Distillers Ltd): Total volumes stood at 10 million cases compared to 9 million cases in Q2 FY26, representing growth of 11.1% year-on-year. The growth was broad based across mass premium and others, and prestige and above, with all four millionaire brands also growing on a sequential basis, complimented by growth across key domestic and international markets, including the defense channel. This strong momentum was visible through the first half of FY27 during which we achieved record monthly sales on three occasions, culminating in our highest ever monthly volume of over 3.5 million cases in September 26. Gross margins stood at 45.3%, an expansion of 90 basis points year-on-year, driven by a profitable brand mix across states and higher realization per case, complimented by backward integration benefits from PET bottle manufacturing, despite the impact of global supply chain disruptions. Reported EBITDA stood at 143 crore, up 10% year-on-year and 19.2% quarter-on-quarter, with EBITDA margin at 12.4%. The margin was lower by 66 basic point basis points year-on-year, reflecting our continued investments in core brands and the newly established super-premium to luxury portfolio. PAT stood at 69 crore, up 9.7% year-on-year and 52% year quarter-on-quarter. Profitably profitability continued to be impacted by global supply chain disruptions, with an estimated impact of 29 crores during the quarter. On a like-to-like basis, excluding this impact, gross margin would have been 47.9%, an expansion of 342 basis points on year-on-year basis. EBITDA would have been 172 crores, higher by 32.3% on year-on-year basis. With EBITDA margin at 14.9%, an expansion of 186 basis points like-to-like, PAT would have been 91 crore, higher by 44.3% on year-on-year basis. This reflects the underlying strength of our operating performance, supported by premium mix improvement and disciplined execution. For H1 FY27, income from operations stood at 2,135 crore, up 10.9% year-on-year, and EBITDA at 263 crore, up 5.8%. Reported PAT for the half year stood at 114 crore compared to 119 crore in H1 FY26. Excluding the 53 crore impact of global supply chain disruptions during the half year, like-to-like EBITDA would have been 316 crore, higher by 27.1%, and like-to-like PAT would have been 154 crore, higher by 29.8% year-on-year. Now, let me discuss the performance of the mass premium and others, and prestige and above segments. Mass premium and others, we delivered a strong quarted quarterly performance in Q2 FY27 in the mass premium and others category. The net sales value was 468 crore, up 15.9% year-on-year and 21.1% quarter-on-quarter. The volumes grew 15.5% year-on-year and 17.7% quarter-on-quarter to 5.5 million cases. Realization per case improved to 848, up 0.4% year-on-year and 2.9% quarter-on-quarter. The overall volume growth was driven by strong growth in the brandy category in the state of Andhra Pradesh. Post receipt of relevant approvals in Q4 FY26, we have
Alok Sinha (Allied Blenders and Distillers Ltd): successfully rolled out the brand in Andhra Pradesh, which is one of the largest brandy markets in India. With strong consumer response, we have been able to achieve near double-digit market share in the state in the mass premium category. We witnessed robust growth in the whisky category as well, led by strong bounce-back of our flagship brand, Officer's Choice Whisky. The growth northern region, which was well-supported by eastern regions and exports market. Officer's Choice remains a strong cash flow generator, retaining its leadership in India's mass premium whisky category and its position as India's number one exported whisky brand. Portfolio, premiumization, and brand momentum. Premiumization remains central to ABD's growth strategy. During Q2 FY '27, Prestige and Above sales grew 13.4% year-on-year and 7.5% quarter-on-quarter to 605 crore. Volume stood at 4.5 million cases, up 6.1% year-on-year and 3.8% quarter-on-quarter, while realization per case improved to 1339, an increase of 6.9% year-on-year and 3.6% quarter-on-quarter. The segment contributed 56.4% of value sales in Q2 FY '27 as compared to 56.9% in Q2 FY '26. On sales volume basis, the segment contributed 45% in Q2 FY '27 as compared to 47%, 47.1% in Q2 FY '26. The P&A contribution was marginally lower to higher growth, lower due to higher growth in the mass premium and other segments, resulting into higher savings. ICONiQ White continued to lead this momentum. The brand delivered 3.2 million cases in Q2 FY '27, up 20.6% from 2.6 million cases in Q2 FY '26, with average monthly volumes continuing to exceed 1 million cases. Overall, in H1 FY '27, ICONiQ White has grown by 26.8% on a year-on-year basis to 6.2 million cases. ICONiQ White is now operating at a meaningful scale, supported by domestic market penetration, the defense channel, and an expanding international presence. It also continues to be recognized as the world's fastest-growing billionaire whisky brand for three consecutive calendar years: CY '23, CY '24, and CY '25. Now, let me provide you with an update on our other millionaire brand, Officer's Choice Blue. As per stated plan, we launched a refreshed identity, identity and premium packaging of the brand from September '26. It features a sleeker bottle, a transparent label with matte gold foiling, and an embossed "trusted since 1988" marker. This has been rolled out across Uttar Pradesh, Maharashtra, Haryana, and West Bengal and has received an encouraging customer response. Now, we will be launching in more markets in phases. Additionally, we have seen a sequential improvement in Officer's Choice Blue brand's monthly performance, with the pace of year-on-year decline moderating progressively, resulting in quarter-on-quarter growth during Q2 FY '27. New launches. In September '26, we launched The Indian Edit to strengthen our premium whisky portfolio. The brand blends Indian malt and grain spirits with fine Scotch malts and features packaging inspired by Indian heritage. It is available in Maharashtra, Haryana, Uttar Pradesh, Assam, Tripura,
Alok Sinha (Allied Blenders and Distillers Ltd): Rajasthan and Goa with further expansion planned and has received encouraging response from trade partners and consumers. Super-premium and luxury portfolio. ABD Maestro continues to be an important platform for our super-premium to luxury ambition. In its first year of operations, that is FY26, we have established a differentiated portfolio of 10 brands with unique positioning across whiskey, gin, vodka and rum categories. In the current year, the focus is on expanding the width of distribution, deeper penetration in addressable markets and strong consumer engagement. The super-premium to luxury portfolio is now present in about 80% of its addressable markets in India and has expanded internationally to seven countries, namely Australia, Canada, Ivory Coast, New Zealand, Rwanda, Sierra Leone, and the UAE. During the quarter, we continued to invest in brand building and distribution initiatives to strengthen the visibility and positioning of the ABD Maestro portfolio supported by our dedicated premium execution team focused on key accounts, on-premise presence, mixology led activation and social visibility. The portfolio continues to receive strong recognition at international and national levels. ABD Maestro has won more than 35 global awards and recognitions since its inception in FY26. These initiatives are aligned with our broader strategy of building brand equity, increasing premium touchpoints. And these global recognitions is establishing ABD Maestro as a credible player in the super-premium and luxury segments while creating long long-term value for our brands. International business, our international business remains a strategic growth opportunity. ABD has expanded its footprint to 42 countries in Q2 FY27 compared to 36 countries in Q4 FY26 with expansion in European and African markets and Australia during the year, reinforcing our position as one of India's leading spirits exporters by volume. Exports continue to be an asset-light and high profitability model for us with superior working capital efficiency and compared to the domestic business, we remain focused on deepening our presence in existing markets while selectively expanding into new geographies. In August 2026, we announced our first overseas local production arrangement for Officer's Choice in Malaysia through an asset-light co-bottling model with an established local partner. This marks an important step in our expansion in Southeast Asia enabling faster market entry with limited capital deployment while maintaining oversight of product quality and brand standards. The company intends to evaluate the phased introduction of additional brands under this framework over time in line with market response and route-to-market readiness. ABD will continue to evaluate similar asset-light production partnerships across select international markets based on market opportunities and strategic fit. Our international growth continues to be driven by our millionaire brands alongside the expanding presence of ABD Maestro super-premium to luxury portfolio. Backward integration and CapEx progress. Backward integration remains an important pillar of ABD's transformation roadmap. Our CapEx program is focused
Alok Sinha (Allied Blenders and Distillers Ltd): on improving supply security, reducing structural costs, and supporting margin expansion over the medium term. We have undertaken backward integration projects in key markets of Telangana, Maharashtra, and Uttar Pradesh. Let me provide you an update on the same. In Telangana, the PET bottles manufacturing facility at Rangapur, commissioned in FY '26, continues to be EBITDA accretive. In October 2026, we commissioned our captive malt distillery at Rangapur with an investment of about 74 75 crore and an annual capacity of about 4 million bulk liters. It is integrated with our existing manufacturing complex, which also houses an ENA distillery, an IMFL bottling unit, and the PET bottle plant. The malt distillery will support the captive malt requirements of our growing Prestige & Above portfolio, reduce dependence on external sourcing, margin accretive from in-house manufacturing, and support the development of our future single malt whisky portfolio. In Maharashtra, in our subsidiary, Meenakshi Agro Industries, Aurangabad, the bottling unit project is progressing well and is expected to be operational in the next couple of months. ENA distillery expansion: We have received the environment clearance from the authorities, and currently, the construction is under progress. Overall, the expansion project is on track to be operational in H1 FY '28. In Uttar Pradesh, UP is one of India's fastest-growing spirits markets and is central to ABD's growth plans. The company has announced an overall investment of over 600 crores in the state. In January 2026, we acquired non-operating assets for about 70 crore and immediately undertook the upgradation of the bottling unit for about 40 crore in Moradabad. In October 2026, we commenced commercial operations at our bottling facility with an initial capacity of 6 million cases per annum. It strengthens our in-house bottling capability in one of our key markets and is expected to improve service efficiency while delivering cost benefits through higher in-house bottling and savings on franchise fees of Rs. 27 per case. In August 2026, the company announced setting up a 66 million bulk liter per year dual mode distillery with an investment of about 293.5 crores in UP, expansion of bottling capacity from the existing capacity of 6 million cases per year to an aggregate capacity of 13 million cases per year by establishing a new, fully automated bottling unit, revamping of the existing 13 million bulk liter per year molasses distillery, and acquisition of additional land for the proposed expansion with an investment of about 202 crores. Across Telangana, Maharashtra, Uttar Pradesh, and Andhra Pradesh, our strategic investments are intended to deepen in-house ENA, malt, PET, and bottling capabilities. These initiatives are expected to improve supply security, drive structural cost efficiencies, and support EBITDA margin expansion over the medium term, including an expected margin benefit of approximately 300 basis points by FY '28 and a further 150 basis points in FY '29. Now other markets: In addition to the key-mentioned markets, we continue to evaluate profitable growth opportunities in other markets as well. Cash flow and balance sheet: Operating cash flow generation stood at 269 crore in H1 FY '27, compared to 147 crore in H1 FY '26. Net debt increased by 292 crore
Alok Sinha (Allied Blenders and Distillers Ltd): 1,273 crore as of September 2026 compared to 981 crore as of March 2026. The increase in net debt was predominantly for capex projects of 351 crore during the half year. As a result, net debt to EBITDA stood at 2.2x and net debt to equity at 0.8x, marginally above our stated framework of below 2x and 0.75x respectively, due to milestone-based payments for certain capex projects. We expect these metrics to be within the stated framework on a full-year financial, on a full financial year basis. We are also pleased that India Ratings and Research has upgraded ABD's rating by two notches to IND A+ to AA- with a stable outlook. We remain focused on disciplined capital deployment. Our capex program is planned to be funded through internal accruals and debt while maintaining leverage within our defined framework through the investment cycle. External environment. The external environment continues to support overall industry growth. Premiumization remains a structural trend in the Indian spirits market supported by evolving consumer preferences and increasing acceptance of higher quality products across categories. The India-UK Free Trade Agreement is positive for ABD, as it supports margin improvement and improves sourcing flexibility for the higher-end portfolio over time. However, recently some uncertainties have been raised by government authorities on the import duty of bulk Scotch under the applicable HSN codes. The industry association, CIABC, has taken up the matter with the relevant government authorities for an early resolution as clear- clarity on the applicable duty structure will be important for the industry to fully realize the intended benefits of the India-UK FTA. At the same time, we remain watchful of inflationary pressures, geopolitical developments and input cost volatility. Global supply chain disruptions continued to have an impact during H1 with an estimated impact of 53 crore, but our underlying business fundamentals remain resilient and our medium-term margin levers remain intact. The regulatory environment also remains supportive with most key state policy updates in place. We expect further momentum from the Telangana policy and anticipated price revisions and we are seeing improving sentiment on the gradual clearance of overdue- outstanding dues in Telangana. Outlook. Looking ahead, we remain focused on driving premiumization-led growth while protecting the quality of margins. Growth will be supported by continued momentum in iconic white, growth in our other millionaire brands and increasing contribution from the ABD Maestro portfolio, the scale-up of the Indian edit in premium whisky and new opportunities in identified white spaces, including deluxe vodka. With the festive season ahead, we expect the top-line momentum to continue. For Officer's Choice Blue, our focus remains on a competitive on a comprehensive brand reset through the packaging innovation undertaken to regain salience and strengthen competitiveness within the prestige and above segment. For Sterling Reserve B7, our priority is to strengthen its premium positioning and rebuild brand momentum within the prestige and above segment. Marketing efforts will be directed towards deepening consumer engagement, enhancing brand salience and improving relevance across key consumption occasions.
Alok Sinha (Allied Blenders and Distillers Ltd): thereby supporting a steady improvement in performance. As already stated, we're targeting a new packaging roll out in Q4 FY '27. Overall, we expect the top line to grow in line with the stated guidance of mid-teens. We will continue to invest behind our core brands, super premium to luxury portfolio and organizational capabilities while maintaining FY '27 EBITDA margins broadly in line with FY '26. This will be supported by premium mix improvement, backward integration benefits, operating leverage and disciplined cost management even as we absorb the short-term impact of supply chain disruptions. To summarize, our strategic priorities are clear: build on the strength of our core brands, accelerate premiumization, scale our super premium and luxury portfolio, expand internationally and strengthen structural margins through backward integration. Supported by a stronger portfolio, a committed team, disciplined execution and a future-ready operating model, ABD ABD is well positioned to deliver sustainable and profitable growth over the medium to long-term. Thank you once again for your continued interest in ABD. With that, we will now open the floor for questions.
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