Tilaknagar Industries Ltd (TI) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to the Tilaknagar Industries Limited earnings conference call. 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 "*" then "0" on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Siddharth Rangnekar from CDR India. Thank you, and over to you, sir.
Siddharth Rangnekar (CDR India): Thank you. Good morning, everyone, and thank you for joining us on Tilaknagar Industries Limited's Q2 FY27 earnings conference call. We are joined today by Chairman and Managing Director, Mr. Amit Dahanukar; Chief Strategy Officer, Ameya Deshpande; Deputy Chief Financial Officer of the company, N. L. Singhal; and General Manager, Growth and Innovations, Sanaya Dahanukar. We shall commence with views from Mr. Dahanukar on the brief of performance and financial highlights, followed by a commentary from Mr. Deshpande on the strategy going ahead. This will be followed by an interactive question-and-answer session. Before we commence, I would like to state that certain statements made on today's call could be forward-looking in nature and a disclaimer to this effect has been included in the results presentation that was shared with you earlier and which is also available on the Stock Exchange website. I would now like to request Mr. Dahanukar to make his opening remarks. Over to you, sir.
Amit Dahanukar (Tilaknagar Industries Limited): Good morning, everyone. Happy to have you all join us on this earnings call to discuss the Q2 FY '27 results. I will provide an update on the current quarter's performance, which will be followed by Ameya taking you through the updates on our strategic investments, Imperial Blue integration, and guidance on future performance. Before I begin with the quarterly performance,
Amit Dahanukar (Tilaknagar Industries Limited): A few key highlights I wanted to share. Firstly, both our flagship brands Imperial Blue Whisky and Mansion House Brandy have registered a robust secondary volume growth of 8.5% and 7.1% respectively, in Q2 FY '27 versus Q1 FY '27. This has led to 100 bps market share increase for Imperial Blue and 70 bps market share increase for TI in prestige and above segment on quarter-on-quarter basis in Q2 FY '27. Imperial Blue market share rose in 17 states across India, with significant market share gains in Karnataka, Andhra Pradesh, Uttarakhand, Assam, and Rajasthan. We have continued to introduce Imperial Blue in newer markets by launching the brand in Kerala during October '26. We will soon be launching the brand in Tamil Nadu, as well. While these are smaller whisky markets, we are confident that our existing strong presence in these states will immensely benefit IB. We have leveraged Imperial Blue's distribution strength in Daman and Diu to relaunch Mansion House Brandy and in Uttarakhand to launch Madiraa Rum. We have also introduced Imperial Black in Uttar Pradesh and Meghalaya during the quarter. In Q1, our overall volumes increased by 160% on year-on-year basis and 2% on quarter-on-quarter basis. The quarterly growth was largely flattish on account of higher primary in Q1 FY '27 in the states which have exited TSMA during Q4 FY '26, and states which were planned for exit in June '26. Now moving to financial performance, the overall NSR moderated by 0.75% to Rs 1,174 per case for Q2 FY '27 from Rs 1,183 per case in Q1 FY '27 and increased by 3.2% from Rs 1,138 per case in Q2 FY '26. On our H1 basis, the NSR grew by 4.2% from Rs 1,131 in H1 FY '26 to Rs 1,179 in H2 FY '27. The slight reduction in NSR in Q2 was account of change in state mix and brand mix. However, we are confident of sustained growth in NSR going forward. The NSR growth will be driven by favorable state mix, price increases, and expected new launches FY '28 onwards. We witnessed a strong growth of 173% year-on-year basis to reach a net revenue of Rs 1,035 crores during the quarter. Adjusted for subsidy, we recorded a growth of 172% to reach Rs 1,033 crores. The ongoing geopolitical tensions have resulted in continued inflationary pressures across packaging inputs, particularly glass, resulting in a meaningful increase in packaging cost during the last two quarters. While exiting Q2 FY '27, ENA prices have also started to show an inflationary trend with rising fuel and grain costs. Consequently, gross margins were under pressure. However, as committed in Q1, we have been working consistently on our cost optimization initiatives which have shown positive results helping us protect our margins. Adjusted for subsidy, we have achieved a gross profit of Rs 432 crores in Q2 FY '27 and a margin of 41.8% compared to 42.1% in Q1 FY '27. Excluding the impact of inflationary pressures, the margin would have been higher, closer to 44%. EBITDA stood at Rs 148 crores for Q2 FY '27, clocking a growth of 146% year-on-year and a margin of 14.3%. Adjusted for subsidy, the EBITDA grew by 143% to Rs 146 crores and a 14.1% margin on the combined business. Excluding the impact of inflationary pressures, the margin would have been approximately 16.5%. A&P reinvestment rates increased by 61 bps in Q2 FY '27 versus Q1 FY '27 on the back of strong ATL and BTL execution drives ahead of the festive season. PAT, adjusted for exceptional items and acquisition related amortization stood at Rs 68 crores for Q2 FY '27, clocking a growth of 30% year-on-year and a margin of 6.6%. Adjusted for subsidy, the PAT grew by 26% to reach Rs 66 crores and a 6.4% margin on the combined business. Excluding the impact of inflationary pressures and subsidy,
Amit Dahanukar (Tilaknagar Industries Limited): creation-related expenses. As on 30th September 2026, our gross debt stood at ₹2,202 crores, and net debt stood at ₹2,074 crores. There is a slight reduction in net debt levels as compared to June '26. I want to reassure you that our target is to take the net debt in March '27 to below March '26 levels. I wanted to reiterate that our focus, going forward, will be divided into four parts: One, continue our journey to generate and fulfill demand for our brands to deliver a double-digit volume growth over a 2- to 3-year period. Two, optimize packaging, processes, and supply chain, and reap benefits of operating leverage and economies of scale, helping us achieve an EBITDA margin of 16% to 18% on combined business. Three, focus on efficient capital deployment, disciplined debt management, and working capital investments, facilitating the reduction of net debt to EBITDA below 1 by FY '29. Four, ride on the pan-India distribution strength of Imperial Blue and Mansion House franchises to expand the TI's luxury and premium portfolio, including strategic investment brands. We have consistently focused on our brand communications and have made impactful strides during the current quarter. On the proud occasion of Independence Day, we had two great outcomes: Firstly, Mansion House Brandy and Monarch Legacy Edition Brandy were showcased in Times Square, New York City for 72 hours, with 2,500-plus plays and 1.2 million-plus visitors. Secondly, TI launched its first ATL campaign for Imperial Blue packaged drinking water under 'Because Men Will Be Men,' which continues with its central theme of humor. We have been continuing our strong execution on the BTL front, with special packs across key markets ahead of the festive season. The overall policy and regulatory environment continued to see encouraging developments in Q2 FY '27. Karnataka, on the back of the recent progressive excise policy reforms, has witnessed strong growth in the prestige and above category, with significant benefits for both Imperial Blue Whisky and Mansion House Brandy. Additionally, Mansion House Brandy emerged as the highest-selling brandy in Karnataka in September '26. During Q2, Imperial Blue Whisky recorded its highest-ever quarterly volumes in the state, with market share crossing 40%, a massive 900 bps increase on a quarter-on-quarter basis. Further, there are early signals of reform in Tamil Nadu, the largest brandy market in India. Mansion House Reserve Brandy has seen 25% quarter-on-quarter volume growth, with 50% year-on-year volume growth in September '26, emerging as the highest volume month ever. We are now very confident that TI, the largest P&A brandy player in India, will be one of the biggest beneficiaries of any reform which takes place in Tamil Nadu. Lastly, I wanted to update you on the super-premium and luxury side of the business housed within House of TI. During the quarter, we have made a strategic investment in Black Tiger Distilleries, the makers of Bodega Suprema No 5, a 100% blue weber agave tequila. We have also expanded the presence of our luxury brand, Monarch Legacy Edition Brandy, Seven Islands Pure Malt Whisky, and Samsara gin owned by SSPL, in Assam during the quarter. We are extremely optimistic on our luxury play, both organic and through our strategic investments. I will now hand over to Ameya to take you through our investment in Bodega, integration of Imperial Blue, and provide guidance on the future performance.
Ameya Deshpande (Tilaknagar Industries Limited): Thank you, and a very warm welcome to everyone joining us today. During Q2 FY '27, we made a strategic investment in Black Tiger Distilleries, the makers of Bodega Suprema No 5, a 100% blue weber agave tequila bottled in Jalisco, Mexico. We are very excited about our maiden foray into tequila, a category growing at 60% CAGR over the last 5 years. Bodega is plugging the gap at an accessible luxury price point. It is already available in four markets, that is Maharashtra, Karnataka, Goa, and Delhi. We have agreed to invest INR 22 crores for a 30% stake in the company over two tranches; INR 6 crores, which has already been invested, and another 16 crores will be invested in the next 12 months. This investment also includes a strategic partnership with TFA, a Mexico-based, family-owned tequila manufacturer, and Mansha Group, one of India's leading alcobev distributors. Our strategic investment approach continues to be opportunity-led and disciplined, with capital allocation based on the strategic attractiveness of an opportunity and long-term profitability in mind.
Ameya Deshpande (Tilaknagar Industries Limited): distribution and operating platform. Our goal is to build a stronger, more diversified and increasingly premium-focused spirits company. On the IB integration front, I'm happy to inform you that the states with transition out of TSMA under TI operations have been stabilized, marking another step towards successful integration. The last remaining state will also be transitioned towards end of financial year '27. As a result, exceptional costs relating to the transition has significantly reduced during Q2 FY '27 and will continue at the same levels over the next two quarters. I would now like to provide some guidance on the combined business going forward. We maintain our guidance for FY '27 to achieving a high single digit to low double digit volume growth for the combined business. And beyond FY '27, including new launches planned for FY '28 onwards, we maintain our volume growth guidance of mid-teens and revenue guidance of mid to high-teens over the next couple of years. In terms of margins, we expect the consolidated EBITDA margins to reach 16% to 18% for the combined business by FY '29, with upward bias on the range. While the margins in H1 FY '27 have been under pressure, we are confident that we will be able to deliver the margin expansion on the back of our premiumization journey, cost optimization initiatives, supply chain efficiencies, and operating leverage. As guided in the past as well, we expect the net debt-to-EBITDA ratio going below 1x by March '29. With that, I would now request the operator to open the call for Q&A.
Moderator: Thank you very much, sir. Ladies and gentlemen, we will now begin with a question and answer session. Anyone who wishes to ask questions, may please press star and one on their touchtone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking our question. We'll wait for a moment while the question queue assembles. The first question is from the line of Abneesh Roy from Nuvama. Please go ahead.
Abneesh Roy (Nuvama): Yeah, thanks. My first question is a bit structural. One is, of course, on the overall sector, if I see the white spirits is growing much faster, numbers for Radico and even United Spirits Pernod Ricard speak for themselves, extremely explosive growth. So in your core markets of South India, for example, and for your legacy brands, I am sure again there the white spirit growth will be much faster than the brown spirits. If you could comment how much is the market growth in your calculation in your the four core markets for the white spirits versus your business? Second quick question on the industry is, you mentioned some initial reforms in Tamil Nadu have started, and you mentioned some numbers which look very good quarter on quarter and YoY. If you could confirm those numbers, and is it for Tamil Nadu? That's the first question.
Amit Dahanukar (Tilaknagar Industries Limited): So, Abneesh, the white spirits the major markets have they are largely been UP, Maharashtra, and Rajasthan. White spirits as a category is not very large in the South India where where we are operating. But nevertheless it has been growing over there itself. But you know, the large markets are the ones which I had specified. And coming to your second question, in terms of the regulatory changes in Tamil Nadu, yes, certain ordering changes have been made which has have affected us positively. In terms of orders being received on depletion, so some some changes at ground level have been made which has helped us increase our our tertiary sales from the outlets.
Abneesh Roy (Nuvama): And can you repeat those numbers? That's for Tamil Nadu, right? Those numbers.
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