United Spirits, Radico Khaitan To Benefit From Premiumisation, Says Antique Broking

Continued growth in the alcohol beverages industry, driven by premiumisation over the next three years, is likely to benefit United Spirits Ltd. and Radico Khaitan Ltd., according to Antique Stock Broking Ltd. The brokerage maintains a positive stance on these companies, projecting strong growth visibility that should help them re-rate from current levels.

Antique has raised United Spirits' target price to Rs 1,513 per share from Rs 1,412 apiece, based on a 60-times price-to-earnings ratio. It has also revised Radico Khaitan's target price upwards to Rs 1,996 per share from Rs 1,849 apiece, based on 45 times price-to-earnings ratio.

United Spirits has seen significant volume growth in its relaunched brands, with Royal Challenge and Signature seeing year-on-year increases of 19% and 16%, respectively, Antique said.

The entry-level prestige and above, or P&A, segment has shown mixed results. While Pernod Ricard's Imperial Blue saw a 5% decline in volume, United Spirits' McDowell's recorded a 5% volume growth. This indicates varying consumer preferences within the entry-level segment.

Pernod Ricard India Pvt. continued to dominate the mid- and upper P&A segments, despite overall flat year-on-year volume growth. However, during this period, the company has underperformed United Spirits across all categories.

The premium portfolio, particularly in the mid- and upper-P&A segments, has consistently outperformed the entry-level prestige segment across all companies, the report said. This trend indicates a clear shift towards higher-quality, premium products among consumers.

Radico Khaitan Ltd. outperformed its peers in the P&A segment, showing 7% year-on-year volume growth. Substantial growth in brands such as Magic Moments (+29% YoY) and 8PM Premium Black (+18% YoY) drove this growth. The company also added a new millionaire brand, 1965 Spirit of Victory Rum, bringing its total to seven.