Synopsis: Nuvama remains positive on Allied Blenders despite Q3 disruption caused by Telangana destocking and Maharashtra policy changes. It expects a Q4 recovery, supported by premiumisation, traction in ABD Maestro’s new launches, and margin expansion from favourable raw materials, India-UK FTA benefits and backward integration. The brokerage has a Buy rating.
Allied Blenders & Distillers remains in focus as Nuvama reaffirms its bullish stance despite a weak Q3 show. The brokerage firm believes that the weakness in Q3 was due to temporary regulatory disruptions in key markets and expects an improvement in Q4. Additionally, premiumisation, new product launches under ABD Maestro, and an improvement in margins due to favourable input trends are expected to keep the growth story and profitability drivers for Allied Blenders & Distillers firmly in place.
With a market cap of Rs 11,423 crore, the shares of Allied Blenders & Distillers Ltd are trading at Rs 408 and are trading at a PE of 42.6 compared to their industry’s PE of 32.5. The shares have given a return of about 29% in the last year.
Regulatory-led weakness, but growth drivers remain intact
Nuvama has a ‘Buy’ recommendation on Allied Blenders with a TP of Rs 670, even as the company has had a poor third quarter. The broking’s report on the company indicates that the poor show in the recent past is being viewed as a mere disruption in the business.
The key reason behind the poor show in the third quarter, according to Nuvama’s Management Meet Note, is regulatory disruption, which saw the impact of Telangana destocking and policy impact in Maharashtra. However, the brokerage is expecting a better show in the fourth quarter, which is in line with the brokerage’s expectation that the poor show in the recent past may not last for long.
While the disruption in the business may not last for long, Nuvama is positive on the stock on the back of the premiumisation story, which is still intact. The brokerage expects premium products to contribute up to 50% of the sales mix by FY28, up from 47% in 9MFY26.
Another factor which will have a positive impact on the company is the traction that the company, ABD Maestro, an 80:20 JV of Allied Blenders and Ranveer Singh, is reportedly gaining. New product offerings like Rangeela and Yello, as well as its luxury positioning through The Collective, indicate that the company is looking to improve its presence in these segments.
Nuvama also expects Allied Blenders to see an improvement in its margins. The company expects a positive trend in raw materials and an improvement in margins due to the India-UK FTA as well as backward integration, which will see its EBITDA margin improve to 17-18% by FY28, up from its current 13.2% as of 9MFY26. All these factors indicate why the brokerage remains positive on the company, expecting Allied Blenders to recover from the Q3 blip.
Financials
The revenue from operations for the company stood at Rs 1,003 crore in Q3 FY26 compared to the Q3 FY25 revenue of Rs 974 crore, up by about 3 per cent YoY. Similarly, the net profit stood at Rs 64 crore in Q3 FY26, up compared to the Rs 57 crore profit in Q3 FY25.
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