Tilaknagar Industries: A Spirited Performance and Strategic Expansion in Q2 & H1 FY26

Tilaknagar Industries Ltd., a prominent player in the Indian alcoholic beverage sector, has reported a strong financial performance for the second quarter and first half of fiscal year 2026. The company, known for its leading brandy brands, is actively pursuing a strategic transformation, marked by significant acquisitions and new product launches. For H1 FY26, Tilaknagar Industries recorded a net revenue of INR 807 crore, demonstrating a robust 17.4% year-on-year growth. The company's EBITDA for the same period surged by 33.2% YoY to INR 155 crore, with PAT growing by 24.5% to INR 103 crore. This performance underscores the effectiveness of its premiumization strategy and focused execution across key markets.

The company's Q2 FY26 performance saw volumes grow by 16.2% year-on-year, reaching 34.2 lakh cases, marking its highest-ever Q2 volume since FY15. This growth was accompanied by market share gains across most key markets, driven by the strong performance of its existing portfolio and incremental gains from new brand introductions. Net sales realization (NSR) also saw a sequential increase, growing from INR 1,193 per case in Q1 FY26 to INR 1,215 per case in Q2 FY26. The company's portfolio composition, as of LTM Mar-25, shows Whisky contributing 67% of the revenue, Brandy 31%, and other products 2%, indicating a significant shift towards the whisky segment.

Strategic Expansion and Portfolio Diversification

A major highlight of the period is the significant progress in the acquisition of the Imperial Blue business division from Pernod Ricard India. The Competition Commission of India (CCI) granted approval for this transaction on October 7, 2025, with the closing expected in Q3 FY26. This acquisition is a transformational opportunity, marking a strategic expansion into the whisky category and positioning Tilaknagar Industries as a pan-India, multi-category player. The deal, valued at approximately €413 million, is expected to be funded through an equal mix of equity and debt, ensuring a prudent capital structure. Management aims to reduce the Net Debt to EBITDA ratio to less than 1.0x by the end of FY29, demonstrating disciplined financial management.

In addition to the Imperial Blue acquisition, Tilaknagar Industries has been proactive in expanding its product portfolio and market reach. The company made a follow-on investment of INR 10.66 crore in Spaceman Spirits Lab (SSL) in August 2025, increasing its stake to 21.36%. This investment strengthens its presence in the premium and craft spirits segments, including Samsara Gin and Amara Vodka, which are now being distributed in Odisha, Puducherry, and international markets. The company also launched Monarch Legacy Edition Brandy, its first luxury foray, in Hyderabad Duty Free, Odisha, Kerala, and Karnataka. Mansion House Whisky, a semi-premium offering, has also seen successful launches in Odisha, Telangana, and Kerala, widening its distribution footprint across new markets.

Operational Excellence and Future Outlook

Tilaknagar Industries is also investing in enhancing its operational capabilities. The Prag Distillery's capacity is being expanded from 6 lakh cases to 36 lakh cases per annum, a critical project given Andhra Pradesh's strategic importance as the company's largest market. This expansion, with a capex outlay of around INR 59 crore, is expected to be commissioned by the first half of FY27. Management's commentary indicates a focus on sustained growth, with a projected mid-teen volume growth for FY26, accelerating to low double-digit to early teens growth in FY27 and FY28. Revenue growth is anticipated to outpace volume growth by 200-300 basis points from FY27 onwards, driven by premiumization and market expansion.

EBITDA margins are expected to remain stable, around H1 FY26 levels for the full year, with a standalone target of approximately 16% for FY27-FY28. The company's net cash position of INR 1,086 crore as of September 2025, following a preferential issue of equity shares and warrants, highlights its strong liquidity and financial flexibility. This robust financial health, coupled with strategic initiatives, positions Tilaknagar Industries for continued growth and market leadership.

Concluding Thoughts: Charting a Course for Pan-India Leadership

Tilaknagar Industries is clearly in a phase of strategic transformation, aiming to become a dominant pan-India and multi-category player. The Imperial Blue acquisition is a pivotal step in this direction, significantly enhancing its presence in the whisky segment and diversifying its revenue streams. Coupled with organic growth initiatives, such as new product launches and capacity expansions, the company is well-positioned to capitalize on the evolving Indian alcoholic beverage market. The disciplined approach to capital allocation and strong financial performance underscore management's commitment to long-term value creation, making Tilaknagar Industries a compelling story to watch in the Indian spirits industry.