1. At a Glance
India’s largest liquor company just poured Q1 FY26 numbers that were a mixed cocktail —Net Sales Value up 9.4%, butEBITDA down 9.7%andPAT down 11.9% YoY. On the rocks: they closed the acquisition of Nao Spirits (makers of Greater Than and Hapusa gins) to capture the premium craft segment. But with a P/E over 60, investors are paying Royal Salute prices for what’s currently a large peg of Antiquity Blue.
2. Introduction
United Spirits, the Diageo India flagship, is basically the bartender to half the country. From Johnnie Walker to McDowell’s No. 1, they have more than 80 brands, including nine million-case brands — and one that sells over 25 million cases annually (guess who? Yes, McDowell’s).
The growth story is about premiumisation — moving consumers from cheap, throat-burning IMFL to smoother, pricier stuff. But the last five years have seenonly 5% sales CAGR, and now margins are feeling the hangover from inflation and competitive pricing.
3. Business Model (WTF Do They Even Do?)
It’s simple:
- Make booze— Scotch, IMFL whisky, brandy, rum, vodka, gin.
- Import & distributeDiageo’s global brands.
- Premiumisethe portfolio — target the growing middle class that wants to upgrade from “quarter bottles” to “single malts.”
The strategy: keep low-margin mass brands but push premium labels where margins are double. The Nao Spirits buy shows they want to ride the craft gin wave before someone else stirs the martini.
4. Financials Overview – Q1 FY26
| Metric | Q1 FY26 | Q1 FY25 | Q4 FY25 | YoY % | QoQ % |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 3,021 | 2,761 | 3,031 | 9.4% | -0.3% |
| EBITDA (₹ Cr) | 638 | 712 | 459 | -10.4% | 39.0% |
| PAT (₹ Cr) | 417 | 485 | 421 | -14.0% | -1.0% |
| EPS (₹) | 5.73 | 6.67 | 5.79 | -14.1% | -1.0% |
Commentary:YoY: Solid top-line growth thanks to price hikes and premium mix, but margins took a hit from higher costs and a less favourable product mix. QoQ: Margins improved seasonally, but volumes were flat.
5. Valuation – Fair Value Range Only
a) P/E Method
- TTM EPS = ₹20.82
- FMCG liquor peer average P/E ~ 45x
- FV = ₹937
b) EV/EBITDA Method
- TTM EBITDA = ₹2,162 Cr
- Net Debt ≈ ₹480 Cr – Cash ₹1,947 Cr = Negative net debt.
- EV/EBITDA ~ 20x → FV ≈ ₹1,050
c) DCF (Premiumisation Case)
- Assuming 10% growth, 10% discount rate → FV ≈ ₹1,020
Fair Value Range:₹940 – ₹1,050Disclaimer: Educational purposes only, not investment advice.
6. What’s Cooking – News, Triggers, Drama
- Nao Spirits acquisitioncompleted — adds premium craft gin brands.
- Premiumisation pushcontinues — expanding Johnnie Walker and Black Dog footprint.
- Dividend policyremains generous with ~34% payout.
- Regulatory
