New Malt Plant Fuels Associated Alcohols! 🚀 Brokerage Sees INR 1,300 Target - Is This Your Next Big Win?

Associated Alcohols has reached a significant milestone with the commissioning of its new 6,000 Liters Per Day (LPD) malt plant in October 2025. This facility is central to the company's strategy to enhance its premiumization and integration in the spirits market, particularly for premium aged spirits, and paves the way for the launch of its own Single Malt Whisky. The plant is located within the company's 150-acre Barwaha complex, which is expected to improve quality control, reduce costs, and strengthen backward integration. These enhancements support Associated Alcohols' ambition for premium and export-led growth.

In terms of performance, the company saw a substantial 37% year-on-year increase in its proprietary Indian Made Foreign Liquor (IMFL) volumes. This growth was achieved through a business realignment with Inbrew, which shifted the focus towards higher-margin proprietary brands, leading to a 38% decline in licensed IMFL volumes. While the company experienced some margin pressure due to rising input costs and lower byproduct realizations, the upcoming launches of Ready-to-Drink (RTD) beverages, Tequila, and Brandy are expected to bolster future growth visibility.

Impact: Choice Equity Broking, a brokerage firm, has maintained its target price of INR 1,300 for Associated Alcohols, based on Discounted Cash Flow (DCF) methodology. This target implies a Price-to-Earnings (PE) ratio of approximately 26x for FY27E and 23x for FY28E. The brokerage notes that Q2FY26 was an atypical quarter affected by input costs and product mix changes, but the company showed strong resilience in its Prestige & Above (P&A) segment. The firm maintains its financial estimates for FY26E and FY27E. Rating: 7/10.

Terms: * LPD: Liters Per Day, a measure of production capacity per day. * IMFL: Indian Made Foreign Liquor, alcoholic beverages produced in India but designed to imitate foreign spirits. * Proprietary brands: Brands directly owned and controlled by the company, usually indicating higher margins. * Licensed IMFL: IMFL produced under license from another entity. * RTD: Ready-to-Drink, pre-mixed alcoholic beverages sold in single servings. * Backward integration: When a company owns its suppliers or its production process extends back to raw materials. * DCF methodology: Discounted Cash Flow, a valuation method that estimates the value of an investment based on its expected future cash flows. * FY26E/FY27E: Fiscal Year 2026 Estimates / Fiscal Year 2027 Estimates, projections for the company's financial performance in those future fiscal years. * PE: Price-to-Earnings ratio, a valuation metric comparing a company's stock price to its earnings per share.