Premium liquor stocks are benefiting from India's premiumisation trend, but rising volumes alone aren't enough. Margins, earnings growth, and returns on capital will determine which companies justify their valuations.
The Indian liquor market is no longer a volume-growth story. And the market has adjusted to this new reality. It is assigning higher valuations to liquor stocks capable of moving more customers toward premium products. Radico Khaitan and Allied Blenders are among the beneficiaries. Both stocks have seen a sharp rerating over the last three years as premiumisation, stronger brand portfolios, and improving profitability attracted investor interest.
FY26 was a strong year for these companies. But as FY27 unfolds, their latest results reveal a divergence in earnings growth, margins, and balance-sheet strength. One company is getting this equation right. Its latest performance offers an interesting case study in how premiumisation, earnings growth, and debt reduction can come together. Prestige & Above: the segment setting the pace Indian liquor companies divide their Indian Made Foreign Liquor (IMFL) portfolios into different price segments.
Prestige & Above (P&A) includes brands positioned above the mass-market or regular category. Brokerages typically place the starting point for P&A at around ₹400 for a 750 ml bottle, with premium brands starting at about ₹1,000 and luxury products at around ₹2,000. FE Stock Insights on WhatsApPGet instant alerts on high-conviction investment themes and fundamental deep dives—direct from Financial Express.Join now The distinction matters because a premium bottle sells at a significantly higher price than a regular one, but its production and distribution costs do not rise in the same proportion.
The additional realisation can therefore translate into higher gross margins and profitability. This is also where white spirits stand out. Vodka and gin remain small at around 4% of IMFL volume, but vodka is among the fastest-growing categories, helped by younger urban consumers, flavoured variants and cocktail culture. #1. Radico Khaitan: Premium brands are doing the heavy lifting Radico Khaitan is currently showing the clearest evidence of how premiumisation can change a liquor company's growth profile.
Total IMFL volumes increased 5% year-on-year to 20.01 million cases, while its Prestige & Above (P&A) portfolio grew 35.8% to 10.5 million cases. P&A now accounts for 53.4% of Radico's own volumes, compared with 42.5% in H1FY26. In contrast, volumes in the Regular & Others category declined 12.5%. Operational Performance (million cases) ParticularsH1 FY26H1 FY27YoY GrowthPrestige & Above7.7310.535.80%Regular & Others10.469.16-12.50%Total Own Volume18.1919.668.00%P&A as % of Total Own Volume42.50%53.40%1,090 bpsRoyalty Brands0.870.36-Total Volume19.0720.015.00% Source: Company Presentation The impact is reflected in the financial performance.
Net revenue from operations grew by 14.3% to ₹3,430 crore in H1FY27. Gross profit margin increased by 530 bps to 48.6%. Half-Yearly Financial Performance ParticularsH1 FY26H1 FY27YoY GrowthRevenue from Operations (₹ cr)3,000.003,429.8014.30%Gross Margin (%)43.30%48.60%530 bpsEBITDA (₹ cr)466.8704.650.90%EBITDA Margin (%)15.60%20.50%490 bpsNet Profit (₹ cr)272.3456.967.80% Source: Company Presentation EBITDA increased 50.9% to ₹705 crore, and Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) margin improved to 20.5% from 15.6%.
Net profit increased by around 67.8% to ₹457 crore. Revenue growth is being outpaced by growth in gross profit and EBITDA, which is indicative of the benefit it is getting from its changing product mix. Radico Khaitan: Returns and Capital Efficiency Metrics Source: Company Presentation Radico’s capital efficiency also mirrors its better profitability. Return on Capital Employed (ROCE) has consistently increased to 29.4% in Q2FY27 over the last 12 quarters.
At the same time, the company has reduced net debt from a peak of ₹771 crore to just ₹175 crore. This combination of higher operating returns and a stronger balance sheet gives Radico greater financial flexibility to invest in capacity and build its premium portfolio. The brand sold 6.21 million cases in the first half, with Q2 volumes growing 49% YoY. Radico estimates its share of India's vodka market at around 60%.
Its growing presence in the vodka category, along with the expansion of premium whisky brands, is supporting the shift towards higher-priced products. There is also a category risk. Brown spirits, particularly whisky, continue to dominate India's liquor market. Vodka accounts for just 6.3% of industry volumes, although this is up from 4.6% a year ago. If the current growth in vodka loses momentum, Radico could face a bigger impact.
Furthermore, as Indian brands move upmarket, they increasingly clash with global spirits giants who have long owned the premium shelf. It will be important to see how much Indian brands can maintain pricing power and increase and defend market share. Radico Khaitan: 1 Year Stock Chart Source: Screener.in #2. Allied Blenders: Premiumisation is progressing, but cost pressures remain Unlike Radico Khaitan, which is already seeing a sharp increase in profitability from its premium portfolio, Allied Blenders & Distillers is still trying to convert its premiumisation strategy into higher margins.
Half-Yearly Operational Performance SegmentSales GrowthVolume GrowthRealization GrowthP&A14.70%8.30%5.90%Mass Premium & Others8.30%9.00%-0.60%Overall11.90%8.70%3.00% Source: Company Presentation The premiumisation trend is also evident in realizations. P&A sales of Allied Blenders rose 14.7% in H1 FY27, driven by 8.3% volume growth and 5.9% growth in realizations. In comparison, Mass Premium & Others saw a 9% increase in volume, but realization was down 0.6%.
Half-Yearly Financial Performance ParticularsH1 FY26H1 FY27YoYRevenue from Operations (₹ cr)1,9252,13510.9%Gross Margin (%)43.80%45.60%180 BpsEBITDA (₹ cr)2492635.80%EBITDA Margin (%)12.90%12.30%-60 BpsProfit After Tax (₹ cr)119114-4.2% Source: Company Presentation Allied Blenders’ financial performance in H1FY27 is a mixed bag. Operating income grew 10.9% YoY to ₹2,135 crore, led by higher volumes and better realizations in the P&A segment.
Gross margin also improved by 178 basis points to 45.6%, which is reflective of the better product mix and improved gross profitability for the company. However, this improvement did not translate into stronger operating profits. EBITDA margin declined 60 basis points to 12.3% from 12.9% a year earlier. Net profit fell 4.2% to ₹114 crore. Business sensitive to external shocks The primary reason for this decline in profitability is supply chain disruptions owing to the West Asia crisis, in which the company took a hit of ₹53 crore.
Excluding this exceptional impact, management indicated that EBITDA would have been ₹316 crore, representing 27.1% growth, with margins closer to 15%. Weak profitability has also impacted capital efficiency. The ROCE fell to 18.4% in September 2026 from 19.7% a year earlier. Allied Blenders is looking at ROCE of 23-25% by FY28, and an EBITDA margin of around 18%. This is an ambitious improvement on the current margin of 12.3%.
Slowing growth of legacy products Another challenge is sustaining growth in its flagship brand, ICONiQ White. Volume growth moderated from 33.8% in Q1 to 20.6% in Q2. Allied Blenders is looking to revive older brands, including Officer's Choice Blue and Sterling Reserve B7, through product and packaging changes. At the same time, it is building its luxury portfolio, Allied Blenders Maestro, which includes Woodburns, Zoya and Arthaus.
These brands could become additional growth drivers, although their contribution will take time to become meaningful. The company is also trying to address cost pressures through backward integration. It is investing in captive extra neutral alcohol (ENA) and malt distilleries across Maharashtra, Uttar Pradesh and Andhra Pradesh to reduce its dependence on external suppliers. Management expects backward integration, along with benefits from the India-UK free trade agreement, to improve EBITDA margins by around 300 basis points by FY28.
Allied Blenders: 1 Year Stock Chart Source: Screener.in Valuations: Earnings growth supports Radico, but Allied Blenders faces a higher hurdle P/E Trend MetricsTrailing P/E5-year Median P/EIndustry P/ERadico Khaitan68.482.246.0Allied Blenders & Distillers83.975.646.0 Source: Screener.in (as on 2 Nov 2026) Radico Khaitan is trading at a trailing P/E of 68.4, below its 5-year median of 82.2. But this is mostly driven by strong earnings growth in recent quarters and not a correction in the stock’s valuation.
The trailing multiple has come down as EBITDA and net profit have grown sharply in H1FY27. 9, higher than the five-year median of 75.6 and the industry multiple of 46.0. This leaves little room for execution setbacks, especially as EBITDA margin contracted and net profit declined in H1FY27. Radico's valuation is better supported by its recent earnings growth, while Allied Blenders needs to deliver on its margin improvement plans to justify its higher multiple.
Tilaknagar Industries: The stock to keep a watch on Unlike Radico Khaitan and Allied Blenders, whose growth strategies are largely centred on expanding their existing premium portfolios, Tilaknagar Industries is using acquisitions to transform its business. It has acquired Imperial Blue from Pernod Ricard and has significantly expanded its scale and given it a pan-India presence. The change in the business profile is substantial.
Until recently, Tilaknagar was largely a regional brandy company, with more than 90% of its volumes coming from brandy and over 85% of sales concentrated in South India. Imperial Blue has changed that mix. Whisky now contributes more than 65% of volumes, while brandy accounts for around 30%. However, the scale-up has come with margin pressure and higher debt. In H1 FY27, adjusted EBITDA margin declined to 14.3% from 15.8% a year earlier, while net debt stood at ₹2,074 crore.
With more than 90% of Imperial Blue's operations having exited the transition agreements, the focus now shifts to extracting synergies and improving cash flows. Tilaknagar is worth tracking, but its ability to convert acquired scale into stronger profitability and reduce debt remains the key test. Earnings, not just premiumisation, will drive the next leg The first-half results show that premiumisation alone does not guarantee stronger earnings.
Radico Khaitan has translated its shift towards P&A products into higher realisations, expanding margins and faster profit growth. Allied Blenders, despite reporting better P&A realisations, is yet to convert this into operating-margin expansion. This distinction matters because both stocks trade at a premium to industry valuations. Radico needs to sustain its earnings momentum as premium products account for a larger share of volumes.
Allied Blenders, meanwhile, must demonstrate that backward integration and investments in its premium portfolio can improve profitability. The next phase of performance will depend on whether earnings growth catches up with market expectations. Investors need to look beyond volume growth and track margins, cash generation, and returns on capital to assess whether the current valuations are justified.
Add these stocks to your watchlist and monitor how they execute their growth plans. Disclaimer Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information. The purpose of this article is only to share interesting charts, data points and thought-provoking opinions.
It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only. Deepan Datta has spent over a decade studying stocks and mutual funds. His passion is to uncover interesting stories in the financial markets and share them through his writings with investors at large. He is focused on delivering clear, easy to understand and research-backed insights.
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