Associated Alcohols, Tilaknagar, Radico Khaitan: Choice bullish, sees up to 36% upside

Despite a subdued quarter marked by monsoon blues and sudden regulatory shifts in key states, Choice Institutional Equities has turned upbeat on India’s AlcoBev sector. In its latest strategy note, the brokerage reiterated a ‘Positive’ sector stance and projected strong gains for select liquor counters — with potential upsides of up to 36 per cent.

Choice flagged Q2FY26 as a slow quarter, largely weighed down by policy disruptions. Maharashtra — one of the country’s biggest liquor markets — saw a 20–25 per cent decline in volumes over the excise duty hike. The state lifted excise duties on IMFL products by over 50 per cent, while taxes on premium imported liquor were raised by 25 per cent, triggering short-term consumption fatigue.

Even so, analysts say the worst is likely behind the industry. Despite muted volumes, companies were supported by a benign raw material pricing environment, which helped them maintain margins both sequentially and annually. A further decline in allocation towards production of ethanol is likely to cause muted RM inflation, cushioning profitability in the coming quarters, it said

Choice expects a sharp turnaround ahead. “We expect Q3FY26E growth to be robust,” the brokerage said, pointing to an early and extended festive season, new product launches, and GST rate cut spillover consumption. The premiumisation trend remains firmly intact, with states like Uttar Pradesh and Telangana emerging as standout markets led by modern policies and growing consumer preference for national brands.

Associated Alcohols & Breweries: The brokerage has issued a ‘Buy’ call with a target price of Rs 1,300, implying an impressive upside of 36.1 per cent from the market price of 955. The note highlights that despite an atypical quarter, “AAB showed strong resilience in the P&A segment,” supported by its path to premium strategy and operational leverage through integration.

Tilaknagar Industries: Choice is equally bullish here, assigning a ‘Buy’ rating with a target price of Rs 650 — an upside of 33.2 per cent from Rs 488. The brokerage pointed to the company’s Royal Leap Beyond Brandy and its transformation from survival to growth investment. While gross margins softened, EBITDA margin maintained at 15 per cent as operational leverage kicked in, Choice said.

The brokerage maintains an ‘Add’ stance on Radico Khaitan and Allied Blenders & Distillers.

For Radico Khaitan, the target has been set at Rs 3,340, with analysts noting that the company reported the highest volume growth of 37.7 per cent, driven by strong traction in its popular segment.

ABDL carries a target price of Rs 690. Choice said “ABDL outshone its peers with NSR growth at 5.2 per cent” in Q2FY26, attributing its momentum to an ongoing portfolio transformation.

However, Choice remains guarded on the sector heavyweight, United Spirits. The brokerage has assigned a ‘Reduce’ rating with a target price of Rs 1,360, suggesting the stock may consolidate despite showing resilience and strength during a challenging quarter.