Radico Khaitan, Allied Blenders shares get Jefferies’ ‘Buy’ rating; up to 25% upside seen; Should you buy?

Shares of Allied Blenders and Distillers, Radico Khaitan, and United Spirits were in focus on Monday after global brokerage Jefferies initiated coverage on the three alcohol beverage companies, seeing an upside potential of up to 25%.

Allied Blenders shares jumped as much as 5.88% to ₹658.70 apiece, while Radico Khaitan shares rose 0.61% to touch a 52-week high of ₹3,851.00 apiece on the BSE. In contrast, United Spirits shares declined as much as 3.22% to ₹1,340.00.

Jefferies noted that Indian alcoholic beverage stocks have significantly outperformed the broader staples sector during FY23–FY26, delivering an earnings per share (EPS) CAGR of over 30%, compared with mid-to-high single-digit growth for staples. The brokerage expects the Indian alcobev industry to remain the fastest-growing globally, supported by favourable demographics, a rising legal drinking-age population, and increasing affordability.

The brokerage believes premiumisation will continue to be the key growth driver. The Prestige & Above (P&A) segment, which currently accounts for around 10% of industry volumes but nearly 40% of profits, remains in the early stages of its growth journey. Jefferies expects the P&A segment to deliver volume growth of about 12%, significantly outpacing the overall industry's estimated 5% growth.

Jefferies has initiated coverage with a ‘Buy’ rating on Radico Khaitan and Allied Blenders and Distillers, while maintaining a ‘Hold’ rating on United Spirits.

Radico Khaitan | Buy | Target Price: ₹4,500

Jefferies said Radico Khaitan has emerged as a credible challenger to industry leaders, backed by strong innovation in high-growth, high-margin categories such as vodka, gin, and Indian single malts. Its execution capabilities and sustained brand investments are expected to drive an estimated 22% EPS CAGR over FY26–FY29, supporting its premium valuation of 62x one-year forward P/E.

The brokerage has assigned Radico Khaitan share price target of ₹4,500, based on 60x June 2028 estimated EPS, implying an upside potential of over 17% from the previous closing price. Radico Khaitan is Jefferies’ preferred pick in the sector.

Allied Blenders and Distillers | Buy | Target Price: ₹780

Since its IPO, Allied Blenders and Distillers has shown improving execution and is transitioning into a premiumisation-led story from a mass-market base, supported by the scaling of IQ and improving product mix. Ongoing backward integration and a rising premium mix are expected to drive 300 bps+ margin expansion, Jefferies said.

The brokerage forecasts a 30% EPS CAGR and nearly 600 basis points improvement in return on capital employed (RoCE) to 25% over FY26–FY29. Jefferies has a ‘Buy’ rating on Allied Blenders shares with a target price of ₹780 apiece, based on 45x June 2028 estimated EPS, implying an upside potential of 25% from Thursday’s closing price.

United Spirits | Hold | Target Price: ₹1,560

Jefferies views United Spirits as the best proxy for India's premium and luxury spirits segment, supported by Diageo's strong global portfolio and leadership in Scotch whisky. However, it believes a successful turnaround of the McDowell’s franchise, which contributes nearly two-thirds of the company’s P&A volumes, will be critical for further earnings upgrades.

Given the stock’s relatively expensive valuation of around 50x one-year forward P/E and a projected EPS CAGR of 12% over FY26–FY29, Jefferies sees limited upside.

It has a ‘Hold’ rating and United Spirits share price target of ₹1,560 apiece, based on 50x June 2028 estimated EPS, implying a potential upside of 13%.

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.