India’s alcoholic beverages industry continues to attract investor interest as premium liquor demand rises and consumer spending remains strong. Global brokerage Jefferies has reiterated its positive outlook on the sector, identifying Radico Khaitan as its preferred investment while maintaining a Buy recommendation on Allied Blenders & Distillers and a Hold rating on United Spirits.
The brokerage believes India’s spirits market is entering a long-term growth phase, supported by favourable demographics, increasing disposable incomes and a steady shift toward premium alcoholic beverages.
Radico Khaitan Remains Jefferies’ Favourite
Jefferies has assigned a target price of ₹4,500 for Radico Khaitan, valuing the company at around 60 times its estimated June 2028 earnings per share (EPS).
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According to the brokerage, Radico Khaitan has consistently strengthened its position in premium spirits through successful product launches and strong brand-building efforts. The company’s presence in fast-growing categories such as vodka, gin and Indian single malts has helped it compete effectively with larger industry players.
Jefferies expects the company to deliver around 22% EPS CAGR between FY26 and FY29, supported by continued premiumisation and disciplined execution.
Buy Rating on Allied Blenders
Jefferies has also maintained a Buy recommendation on Allied Blenders & Distillers with a target price of ₹780 per share, indicating an estimated upside of around 25% from the stock’s recent trading levels.
The brokerage believes Allied Blenders is benefiting from strong demand for premium brands, continuous product innovation and expanding market share in India’s fast-growing spirits segment.
Hold Call on United Spirits
For United Spirits, Jefferies has retained a Hold rating with a target price of ₹1,560 per share, suggesting moderate upside from current levels.
While United Spirits remains a dominant player in the premium liquor market, Jefferies believes its already high premium product mix limits the scope for rapid volume expansion compared to emerging competitors.
India’s Premium Liquor Market Continues to Expand
Jefferies expects India’s alcoholic beverages industry to remain among the world’s fastest-growing markets over the coming years.
Several structural factors are supporting this outlook, including:
- Rising disposable incomes
- A growing young adult population entering the legal drinking age
- Increasing urbanisation
- Consumer preference for premium and luxury alcohol brands
The brokerage estimates that more than 100 million Indians will reach legal drinking age over the next five years, creating a significant long-term demand opportunity for liquor manufacturers.
Premiumisation Driving Industry Profits
Although premium liquor brands account for only a small portion of total industry volumes, they generate a disproportionately large share of profits.
Jefferies estimates that premium products contribute over 40% of industry profits, despite representing roughly 10% of total sales volumes.
The brokerage expects the premium segment to record approximately 12% annual volume growth, significantly higher than the broader industry’s expected growth rate of around 5%.
Radico and Allied Blenders Gaining Market Share
Between FY22 and FY26, Radico Khaitan and Allied Blenders recorded strong growth in premium product volumes, outperforming several established competitors.
Jefferies expects both companies to continue expanding their premium portfolios during FY26-FY29 as premium products still account for less than half of their total sales, leaving considerable room for further improvement in product mix.
In contrast, United Spirits already derives a large share of its business from premium products, limiting future mix-driven growth.
Industry Margins Expected to Improve Further
The brokerage also expects profitability across the Indian liquor industry to strengthen further.
Operating margins have already improved over the past few years due to easing raw material costs, better product mix and improved pricing.
Looking ahead, Jefferies believes additional support could come from:
- Continued premiumisation across the industry
- Greater backward integration by manufacturers
- Potential cost savings under the India-UK Free Trade Agreement
- Improved operational efficiencies
Despite increasing competition in premium spirits, Jefferies believes low premium liquor penetration in India leaves ample room for sustained long-term growth.
Outlook
Jefferies remains constructive on India’s alcoholic beverages sector, citing strong demographic trends, rising premium consumption and improving profitability. Among listed companies, Radico Khaitan stands out as its preferred investment, while Allied Blenders & Distillers also offers attractive growth potential. United Spirits continues to remain a stable industry leader, though its future growth is expected to be comparatively moderate due to its already mature premium portfolio.
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