United Spirits is on a high after RCB’s IPL win, JP Morgan upgrade and UK FTA. Can it keep buzzing?

Popular includes brands like the DSP Black whisky. Mid Prestige comprises the Royal Challenge brand, and Upper Prestige includes the likes of Signature and American Pride. Together, these account for the remaining 33% of revenues.

Premiumization driving growth

India is the world’s third-largest consumer of alcohol, and about a third of the demand is for spirits. Of course, the recent trend towards a healthy lifestyle has mellowed the growth in demand. Notwithstanding, continuing the post-pandemic release of pent-up demand, premium alcohol has retained its appeal.

This has benefited diversified players like United Spirits. While the alcoholic beverage industry in India grew at a CAGR of barely 2% between 2018 and 2023, United Spirits’ topline has seen growth in the high single digits.

Its overall net sales value (NSV) grew at a CAGR of 10% between FY21 and FY24, while NSV growth of brands categorized as Prestige and Luxury + Premium saw a whopping 19% growth.

The trend has continued in FY25 as well. Overall NSV growth of 8% was led by 11-13% growth in Mid and Upper Prestige, and Luxury + Premium categories. This more than made up for the muted 1% growth seen in the Popular segment.

Well placed to capture industry tailwinds

Among the top 10 liquor-consuming countries in the world, India bucked the global trend of stagnant alcohol sales. According to an analysis by London-based spirits consultant IWSR, with 9% growth, India emerged as the fastest-growing alcohol market, almost touching the $40 billion milestone in sales.

With a rising LDA (legal drinking age) population and significant room for penetration, alcohol sales in India are set to cross $50 billion by 2031.

It is also important to note the premium tilt to Indian consumption. India ranks eighth in terms of volume of alcohol consumption, but fifth by value. Even the 9% growth in 2024 came on the back of premiumization, even as volume-growth was much mellower at 6%.

To capture a larger share of India’s premium consumption pie, United Spirits has doubled down on its high-end offerings. It has launched the X-series, the Double Oak Barrel variant, and pocket-packs in the market-leader, McDowells. It has also launched a ‘Taj’ edition of its Indian malt, Godawan.

To appeal to the growing alcohol appetite of the Indian consumer, Indian flavours like Mirchi Mango have been introduced for its Smirnoff vodka. From ₹1,350 in FY21, realization per case has increased to ₹1,810 in FY25. ROCE has expanded from 16% to 26% during the period.

Also read: India is the world’s fastest-growing alcohol market when global demand cools

Promising outlook

FY25 saw muted revenue growth of 5%, primarily due to fewer matches played by RCB during the year. However, margin expansion led to 12% growth in its bottom line. Going forward, its sustained strategic spending on advertising and promotion should help strengthen its brand equity further.

The company has also commenced co-located plants with ENA distillation and optimized its manufacturing footprint through capacity integration. Backed by improving product mix and these cost-efficiency initiatives, JP Morgan revised the company’s Ebitda estimates upwards by 3% and 7% for FY26 and FY27.

The counter is trading at almost 75 times its earnings, sharply higher than the 45x multiple seen a couple of years back. However, driven by strong projections for growth and a positive turnaround in the regulatory environment, the target price of the stock has been pegged at Rs.1,800 per share. This reflects a 12% upside from current levels.

For more such analysis, read Profit Pulse.

Ananya Roy is the founder ofCredibull Capital, a SEBI-registered investment adviser.

Disclosure: The author does not hold shares of the companies discussed. The views expressed are for informational purposes only and should not be considered investment advice. Readers are encouraged to conduct their own research and consult a financial professional before making any investment decisions.