Nomura has initiated coverage on United Spirits Ltd (USL) with a “Buy” rating and a target price of ₹1,650, citing a major shift in India’s alcoholic beverages market toward premiumisation. Analysts Mihir P. Shah and Riya Patni note that consumers are moving from “drinking more” to “drinking better,” giving companies with strong premium and prestige-and-above (P&A) brand portfolios an opportunity for outsized growth.
Premium and white spirit categories are expanding rapidly, driven by rising aspirational consumption, urbanisation, and higher disposable incomes. Indian single malts, including Rampur, Indri, and Godawan, have gained international recognition, fueling domestic curiosity and boosting demand. Between FY19 and FY24, single malt whiskies in India recorded a 22% compound annual growth rate (CAGR).
High entry barriers, such as complex state regulations and heavy marketing requirements, limit competition, benefiting established players like USL. Nomura also highlights supportive regulatory tailwinds, including rationalised distribution systems and the proposed India-UK Free Trade Agreement, which could further accelerate premium sales and margins.
On-trade channels such as hotels, restaurants, and catering (HoReCa) are becoming key to premium growth, as they enhance brand visibility and pricing power. Social acceptance of alcohol, urbanisation, and rising female workforce participation are expanding the market further, with 3-5 million new consumers entering the market annually.
Nomura projects USL’s earnings per share (EPS) to grow at a 13% CAGR between FY26 and FY28. The main risk is a slower-than-expected scale-up of premium brands, which could temper the sector’s growth trajectory.
In summary, Nomura sees United Spirits well-positioned to benefit from India’s premium alcohol wave, driven by evolving consumer preferences, regulatory support, and global recognition of Indian brands.
