Liquor stocks today: Alcohol companies have emerged as the biggest winners in the Nifty FMCG index over the past year, leaving heavyweight staples such as Hindustan Unilever, Nestlé India, Dabur and Colgate-Palmolive in the red. According to exchange data, while the Nifty FMCG index has slipped about 3 per cent in the period, Radico Khaitan and United Spirits have outperformed sharply.
Radico Khaitan, United Spirits drive outperformance
Radico Khaitan’s stock price has jumped 48 per cent in the last 12 months, making it the top performer in the index. United Spirits has delivered a 15 per cent gain, while Marico, Patanjali Foods, Britannia, Tata Consumer and ITC posted single-digit returns of between 4–14 per cent. In contrast, several large consumer staples have seen negative returns, pulling down the overall FMCG gauge.
Why liquor stocks are on a high
Jefferies analysts attribute the rally in spirits makers to three key factors:
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- Stable input costs: Prices of extra neutral alcohol, a key raw material, have remained steady.
- Premiumisation: Demand for high-end and luxury alcohol products has surged, particularly among younger consumers with rising disposable incomes.
- Margin expansion: Industry-wide gross margins have improved. United Spirits’ Q4FY25 gross margin rose to 15 per cent from 12 per cent a year ago; Radico Khaitan improved to 14 per cent from 11 per cent. Allied Blenders & Distillers also saw margins rise to 12 per cent from 7 per cent, while United Breweries and Som Distilleries reported similar improvements.
Long-term triggers remain intact
Brokerages expect the premium spirits segment to continue growing on the back of India’s youthful demographics and higher incomes.
According to Jefferies, the country’s spirits space is set to see significant growth in demand for premium products, with gradual growth expected in key players’ top and bottom lines.
The brokerage expects three long-term triggers for spirits makers:
- Strong demand for luxury alcohol products
- Growing youth population and rising incomes
- Growth in premium whisky and high-end brands
Jefferies has a ‘buy’ call each on USL, Radico Khaitan and Allied Blenders, with targets of Rs 1,570, Rs 3,590 and Rs 620, respectively.
Citi and Goldman Sachs maintain ‘Buy’ calls on United Spirits with target prices of Rs 1,800 and Rs 1,700 respectively.
Radico Khaitan has also received bullish calls, with some analysts forecasting over 35 per cent EPS growth between FY25 and FY28.
Allied Blenders is seen as a potential beneficiary but will need strong execution to deliver.
