ABD charts FY26 with consolidation, malt plant rollout, and Indian Single Malt launch

Any key highlights during the quarter?

We call FY25 the year of transformation, starting with our IPO. The focus has been on four fundamental pillars — premiumisation, margins, backward integration, which is margining freedom, and our governance culture.

Our P&A salient, which was 37 per cent, is now more than 42 per cent, signalling a quarter-on-quarter improvement. The P&A salients, in terms of value, have gone up to almost 50 per cent plus. And in the super premium and luxury segment, where we did not have any presence, we have built a portfolio. We have six brands in the super premium and luxury segment, and will add more brands this financial year.

There has been a change of almost 500 basis points on our gross margin, which is also helping us on our EBITDA margins, which grew from 7.5 to about 12 per cent.

Post the IPO, we also did our re-rating and paid off the high-cost debt. As a result, we have low-cost debt, and it reflects in our interest cost. In Q1, pre-IPO, our interest cost was about ₹45 crores a quarter. That is a substantial reduction in our interest cost and is leading to a significantly higher bank. We also identified a revenue and margin-included backward integration project.

To increase our capital E&A capacity from 33 to 100 per cent, we acquired Menakshi Agro, which is running at 100 per cent capacity and is currently at a cool stage for capacity expansion.

Your profits have seen a notable uptick both quarter-on-quarter and year-on-year. What’s driving this improvement?

Our revenue growth has been double-digit. P&A has shifted to 42 per cent, resulting in a better cross-margin profile. EBITDA grew from 240 crores last year to 450 crores this year, lower interest score, leading to a significantly higher PACT. So, this was a hard-working program that was put in place, which has now resulted in the growth both at the EBITDA level and at the pact level.

With the recent tariff reductions on spirits from the UK and the US, what impact do you foresee on your business?

We welcome this policy initiative and have been looking forward to it for quite some time. As an Indian company, we are the largest importer of scotch into India. The reduction of the customs duty reduces our cost of goods. Therefore, it will have a favourable impact on our gross margins, which will flow again into EBITDA.

As we are building our super premium and luxury portfolio, it will also create better market access because we expect some reduction in the MRS, potentially resulting in the expansion of the segment.

Interesting brands and flavours may enter the Indian market. It also gives us the opportunity to take Indian single malt to the world. It will greatly benefit the international market on the back of lower tariffs.

While Indian single malt will tremendously gain from the international market, the domestic premium and super premium products need protection from dumping. A key ask from the Indian industry through CIABC has been that goods should be bought into India with at least a minimum import price (MIP) when it comes to bottled goods.

Among your mass, premium, luxury, and P&A portfolios, which one do you expect to perform best going forward?

Our P&A salience is currently 42. We are targeting to get our P&A salience to 150 per cent. So, a large part of our value growth, volume growth, and margin expansion will be on the back of the P&A segment, both in prestige whiskeys and in the super premium and luxury segment.

Officer’s Choice, which is our flagship brand, will continue to grow. We have worked hard to get the gross margin of Officer’s Choice at the same level as any other P&A whiskey. Therefore, it’s extremely profitable and we’ll continue to focus on growing this brand in profitable markets, both in India and outside of India, because this is the largest exported brand. We are also expanding the footprint of Officer’s Choice.

So, a large part of our growth will be driven by the P&A category, and profitable growth on Officer’s Choice will help us deliver a double-digit growth over the next few years.

What are your expectations for FY26?

FY26 is a year of consolidation. The portfolio we built out in the super premium and luxury segment will get an international rollout. We will also start exporting a part of these brands to the rest of the world. The CapEx program we put in place, and the P&D plant, will get into production in Q2 of this financial year. Our Malt plant in Telangana will also get into production this financial year, giving us significant security and making way for the launch of our own Indian Single Malt. These projects will start adding to our EBITDA. So, we see further expansion in gross margins.

We are also looking at getting a re-rating done to further reduce our interest costs. This year, P&A sales will change, gross margin should expand, and interest costs will come down further, delivering a better EBITDA and a better path.