Global brokerage firm Jefferies has highlighted Radico Khaitan as its preferred choice within the Indian alcoholic beverages sector. This endorsement comes amidst a period of robust growth for the industry, which has significantly outpaced the broader consumer staples market over the past few years.
Jefferies' Key Recommendations and Price Targets
According to Jefferies' analysis, Radico Khaitan has received a price target of Rs 4500, based on 60x its estimated earnings per share (EPS) for June 2028. The brokerage firm credits Radico's strong innovation in high-growth, high-margin categories like vodka, gin, and Indian malts, along with superior execution and brand-building capabilities, for its outperformance. Analysts project a 22% EPS Compound Annual Growth Rate (CAGR) for Radico Khaitan between FY26 and FY29.
For Allied Blenders, Jefferies issued a 'Buy' rating, setting a target price of Rs 780. This represents a potential 25% upside from its current market price of Rs 624. Meanwhile, United Spirits received a 'Hold' recommendation with a price target of Rs 1560, indicating a 13% upside from its current market price of Rs 1385.
India's Booming Alcoholic Beverages Market
India's alcoholic beverages industry is currently one of the fastest-growing globally, driven by favorable long-term demographic trends and increasing consumer spending. Projections indicate that over 100 million individuals will enter the legal drinking age within the next five years, further fueling demand. Premiumisation remains a critical growth engine, with the Prestige & Above (P&A) category expected to lead the next phase of expansion.
While premium brands constitute only about 10% of the total industry volumes, they contribute more than 40% of the sector's profits. This highlights significant room for consumers to transition to higher-priced offerings. Analysts anticipate the P&A segment to record volume growth of approximately 12%, more than double the estimated 5% growth for the overall industry.
Market Share Dynamics and Profitability Trends
Radico Khaitan and Allied Blenders & Distillers have successfully gained market share through consistent product innovation, strategic premium brand launches, and strong execution. Between FY22 and FY26, both companies reported premium segment volume growth of 14-21% CAGR, significantly outperforming larger rivals such as United Spirits and Pernod Ricard, whose premium portfolios expanded at a slower 2-6% CAGR.
Profitability across the industry has also seen material improvement. Operating margins expanded by roughly 4-7 percentage points between FY23 and FY26. This positive shift was primarily driven by a richer product mix and easing raw material costs, including extra neutral alcohol (ENA) and glass packaging, alongside more stable state-controlled pricing.
Outlook for Sustained Growth and Margins
The industry's margin profile is expected to strengthen further. Continued premiumisation, increased backward integration by manufacturers, and potential cost benefits from the UK-India Free Trade Agreement are likely to support sustained profitability. Despite intensifying competition in the premium segment, the relatively low penetration of premium alcoholic beverages in India offers substantial room for long-term volume growth, an enriched product mix, and further margin expansion across the sector.