/** blogpostTitle: Associated Alcohols FY26: Margins Up, Proprietary IMFL Takes the Wheel blogpostSlug: aabl-fy26 blogpostShortTitle: AABL FY26 margins rise, brand push blogpostCoverImageDescription: An ultra realistic corporate finance scene showing a clean desk with a laptop displaying a simplified financial dashboard: one chart with net revenue slightly down and another with EBITDA margin rising, alongside a separate bar chart showing higher contribution from proprietary IMFL. In the background, a modern industrial complex silhouette representing an integrated distillery with tanks and bottling lines. Neutral lighting, professional boardroom aesthetic, no logos or readable text. */

Associated Alcohols FY26: Margins Up, Proprietary IMFL Takes the Wheel

Associated Alcohols and Breweries Limited (AABL) ended FY26 with a clear message: the mix is changing, and profitability is improving even when the top line is not. For FY26, net revenue from operations was INR 1,019.4 crore versus INR 1,075.9 crore in FY25, a decline of 5%. But EBITDA rose to INR 142.9 crore from INR 128.0 crore, and EBITDA margin expanded to 14% from 12%. Profit after tax increased to INR 88.5 crore from INR 81.4 crore, with PAT margin improving to 9%.

This pattern also showed up in Q4. Net revenue from operations was INR 238.5 crore, down 2% year on year, but EBITDA grew 13% to INR 40.3 crore and margin improved to 17%. PAT for the quarter was INR 23.5 crore, up 5%.

Management attributed the flattish topline to a conscious change in business relationships, particularly the transition of Inbrew from an IMFL licensing arrangement to a contract manufacturing model. The result was a revenue mix that shifted toward segments where AABL has been scaling its own brands and improving operating efficiency.

FY26 segment mix: proprietary IMFL rises, ethanol weakens

AABL operates across the liquor value chain, spanning proprietary IMFL, licensed IMFL, IMIL, merchant ENA, ethanol and contract manufacturing, with by-products such as cattle feed. The company also commissioned a malt facility, adding another layer of backward integration.

The FY26 mix (as presented) highlights that proprietary IMFL is becoming more material. Proprietary IMFL contribution increased to 17% of revenue in FY26 (from 13% in FY25), while IMFL licensed brands declined to 20% (from 22%). Ethanol rose to 15% of revenue, but the operating environment for ethanol was challenging during the year.

Merchant ENA improved to 14% of revenue in FY26 (from 11%), supported by higher volumes and stable realizations. Management also indicated that about 50% of ENA is used for captive consumption.

Financial summary

Proprietary IMFL: growth engine with margin uplift

The strongest operating momentum came from proprietary IMFL. In Q4FY26, proprietary IMFL volumes grew 37% year on year to 660 thousand cases and revenue grew 38% to INR 50.3 crore. Segment EBITDA rose to INR 11.1 crore with EBITDA margin expanding to 22%.

For FY26, proprietary IMFL volumes grew 32% to 2,378 thousand cases and revenue increased 29% to INR 177.0 crore. FY26 segment EBITDA was INR 32.3 crore, and margin improved to 18%.

Management highlighted traction in the Central Province series, and on the call noted that Orange CP Vodka achieved close to 25% market share within Madhya Pradesh in its category within six months of launch.

At the same time, management was explicit that the 22% margin in Q4 should not be extrapolated. They said proprietary IMFL margins are expected to normalize in the 15% to 17% range as marketing and brand-building expenses rise, especially with a larger push into premium categories.

A key strategic target disclosed in the presentation is to scale proprietary IMFL to around 50% of total revenue excluding ethanol by FY30.

Licensed IMFL and the Inbrew transition

The biggest year-on-year decline was in IMFL licensed. In Q4FY26, volumes fell 50% year on year and revenue fell 51%. For FY26, IMFL licensed volumes declined 33% and revenue declined 36% to INR 152.2 crore.

Management linked this decline to a planned realignment, where the Inbrew business moved from an IMFL licensing arrangement to a contract manufacturing model. This helps explain why consolidated profitability improved even as some segments contracted.

IMIL: steady volumes, better realizations and margins

IMIL remained stable on volumes and improved on value. In Q4FY26, IMIL volume was down 3% year on year to 985 thousand cases, but revenue increased 7% to INR 61.8 crore. Realizations improved 11% and EBITDA margin increased to 20%.

For FY26, IMIL revenue increased 10% to INR 255.9 crore and EBITDA margin expanded to 18%.

Merchant ENA: strong quarter and better annual performance

Merchant ENA delivered one of the sharpest growth rates in Q4. Volumes rose 129% year on year to 6.9 million litres, revenue increased 128% to INR 46.5 crore, and EBITDA margin remained at 14%.

For FY26, merchant ENA volumes increased 20% to 22 million litres and revenue increased 24% to INR 146.9 crore. Margin improved to 12% from 10%.

Management stated that ENA production improved to 50 million litres from 47 million litres last year due to higher plant efficiencies, streamlined operations and reduced downtime.

Ethanol: oversupply pressure and policy dependency

Ethanol was the most challenged segment in Q4FY26. Volumes declined 35% year on year and realizations declined 23%, leading to a 47% revenue decline to INR 23.9 crore.

For FY26, ethanol volume declined 14% and revenue declined 18% to INR 201.9 crore. Management attributed this to industry oversupply and lower allocations. They stated that volumes may improve if blending targets rise beyond 20% and said they are exploring sales to private buyers in addition to oil marketing companies.

Strategy and capex: Kerala bottling control, RTD, tequila and malt maturation

AABL’s strategic narrative is built around three pillars: becoming a pan-India player, strengthening backward integration, and building a 360-degree portfolio across categories.

On geography, the company listed current presence across Madhya Pradesh, Chhattisgarh, Keralam, Delhi, West Bengal, Uttar Pradesh, Maharashtra, Mahe, Goa, Jharkhand, Rajasthan, Gujarat and Manipur, with targeted entry into Odisha, Andhra Pradesh and Karnataka. Management stated on the call that the company is already present across 14 states.

A major operational move is the acquisition of SDF Industries in Kerala. The presentation disclosed an acquisition cost of INR 30.85 crore under an IBC resolution plan (NCLT Kochi Bench approval dated April 16, 2026). The facility has IMFL bottling capacity of 4.3 million cases per annum and a land parcel of around 10 acres. Operations are targeted to commence by September 2026 after technology upgrades and renewal of permits. Management indicated that moving bottling in-house should address operational constraints faced with third-party bottlers.

On product launches, the company disclosed a soft launch of RTD Kultur in Madhya Pradesh, with registrations underway in other states. Management also guided that premium brandy and tequila are targeted for launch in H1FY27, with tequila facing shipment delays.

The malt strategy is a longer runway initiative. The company commissioned a 6,000 LPD malt facility and began maturing malt in barrels. Management indicated the first lot is expected in FY28 and that AABL plans to launch its own single malt around FY28, with a higher-end variant later. They also stated that some malt could be used internally to reduce purchased malt costs and some may be sold in the open market.

Capex and funding approach

The presentation disclosed FY27 capex of INR 65 crore. It also specified that INR 55 crore has already been incurred for the malt plant, with an additional INR 15 crore expected for casks in FY27. In addition, INR 10 crore capex was indicated for bottling automation, and INR 40 crore capex linked to SDF (including INR 30.85 crore acquisition cost).

AABL positioned this investment cycle as being funded largely through internal accruals, supported by a low leverage balance sheet.

Balance sheet: low gearing, but working capital increased

AABL highlighted a low gearing profile. Net debt to equity was negative at -0.09x in FY26 and interest coverage was 23x.

However, working capital intensity increased. Net working capital days rose to 41 in FY26 from 29 in FY25, driven mainly by inventory days increasing to 52. Cash conversion was also weaker in FY26, with operating cash flow of INR 51.8 crore and a cash conversion ratio shown as 0.36x.

Guidance: FY27 margin target and growth expectations

Management provided explicit guidance in the call. Overall revenue growth for FY27 was described as around 10% plus on a consolidated basis, while proprietary IMFL growth was indicated at 25% to 30%. The CFO stated EBITDA margin guidance for FY27 at around 15%.

Takeaways

FY26 marked a decisive shift in AABL’s operating focus. The company accepted a near-term top line trade-off while transitioning its business mix and scaling proprietary IMFL. Margin improvement in both consolidated and key segments supports the narrative of better operating discipline.

The next 12 to 18 months will likely be defined by execution on three fronts: scaling proprietary IMFL across more states, bringing the Kerala bottling asset onstream by September 2026, and sustaining profitability while marketing spends rise with premiumisation. The malt and single malt program remains the longer-duration catalyst, with management anchoring expectations around FY28 maturation and launch timelines.