TI - Tilaknagar Inds.

📊 NSE: TI 🏢 Breweries & Distilleries 📅 Last Updated: 12/14/2025 14:23

💰 Financial Performance

Revenue Growth by Segment

Total Revenue from Operations (net of excise) grew 2.9% YoY to INR 1,434.15 Cr in FY25. Volume in the existing business grew 6.7% to 11.9 million cases, while Q2 FY26 volumes grew 16.2% YoY to 34.2 lakh cases.

Geographic Revenue Split

Andhra Pradesh (AP) contributes 30% of total revenue. The company has a strong presence across Southern India, particularly in Karnataka and Puducherry, which are the only states where it has pricing power.

Profitability Margins

Operating margins increased from 13.3% in FY24 to 17.8% in FY25 (16.1% excluding subsidy). Q2 FY26 EBITDA margin stood at 15.1%, impacted by higher advertising spends (2.1% of revenue) and legal costs.

EBITDA Margin

EBITDA grew 37.4% YoY to INR 255 Cr in FY25, with margins expanding 447 bps to 17.8%. Adjusted for subsidy, EBITDA was INR 226 Cr (16.1% margin). Q2 FY26 EBITDA was INR 60 Cr.

Capital Expenditure

Planned capital expenditure for the existing business is estimated at INR 70-75 Cr over the medium term, funded by net cash accruals of INR 170-190 Cr.

Credit Rating & Borrowing

CRISIL has placed the company on 'Rating Watch with Positive Implications'. Total debt reduced from INR 119 Cr to INR 42 Cr in FY25, with interest coverage improving from 7.06x to 22.39x.

⚙️ Operational Drivers

Raw Materials

Extra Neutral Alcohol (ENA) derived from grain and molasses represents the primary raw material cost. Packing materials also constitute a significant portion of the cost of materials consumed (INR 764.53 Cr in FY25).

Import Sources

ENA is sourced from agro-based products (grain and molasses) within India, with prices heavily dependent on the vagaries of the monsoon in agricultural states.

Capacity Expansion

The company is undergoing a transformative expansion through the acquisition of the 'Imperial Blue' brand from Pernod Ricard, expected to close in Q3 FY26. Existing business capacity utilization is reflected in the 11.9 million cases sold in FY25.

Raw Material Costs

Cost of materials consumed rose 10.4% YoY to INR 764.53 Cr in FY25. ENA prices remain volatile due to monsoon impacts, though recent softening of prices helped improve FY24/FY25 margins.

Manufacturing Efficiency

Operating leverage improved margins as volume grew 20% in Q4 FY25 compared to the previous year, allowing for better absorption of fixed costs.

Logistics & Distribution

Excise duty, a major distribution-linked cost, rose 11.3% to INR 1,740.46 Cr in FY25, reflecting the high-tax nature of the IMFL industry.

📈 Strategic Growth

Expected Growth Rate

15-18%

Growth Strategy

Growth will be driven by the acquisition of the Imperial Blue brand (closing Q3 FY26), mid-teen volume growth targets for FY26, and a 200-300 bps revenue premium over volume growth from FY27 onwards through premiumization and geographic expansion in the Prestige & Above segment.

Products & Services

Indian Made Foreign Liquor (IMFL), specifically Brandy and Whisky, sold in various categories including the premium 'Prestige & Above' segment.

Brand Portfolio

Mansion House Brandy, Courrier Napoleon Brandy, Imperial Blue (acquisition pending), and Spaceman.

New Products/Services

New products in the premium category and the introduction of existing brands like Spaceman into new markets like Goa are expected to drive incremental revenue.

Market Expansion

Increasing geographic penetration across India and leveraging the UK/India Free Trade Agreement (FTA) as a tailwind for the Imperial Blue business division.

Market Share & Ranking

The company reports market share gains in most key markets during Q2 FY26, though specific percentage rankings are not provided.

Strategic Alliances

Transition Manufacturing and Services Agreement (TSMA) with Pernod Ricard (PRI) to ensure smooth integration of the Imperial Blue brand.

🌍 External Factors

Industry Trends

The IMFL industry is seeing a 'premiumization' trend where consumers shift to higher-priced brands. The industry is also evolving through 'Route-to-Market' changes (privatization of retail) in states like Andhra Pradesh.

Competitive Landscape

Highly competitive with established players and new capacities; competition is intensifying through industry consolidation and establishment of new premium brands.

Competitive Moat

Moat is built on strong brand equity in the Brandy segment (Mansion House) and high entry barriers created by complex state-level liquor regulations and licensing requirements.

Macro Economic Sensitivity

Highly sensitive to agricultural inflation (grain/molasses for ENA) and state government fiscal policies regarding excise duties.

Consumer Behavior

Shift toward premium and prestige liquor categories is driving the company's focus on the 'Prestige & Above' (P&A) segment to improve realizations.

Geopolitical Risks

Inflationary headwinds from the Russia-Ukraine conflict have previously impacted profitability through increased input and logistics costs.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by the Bombay Prohibition Act, 1949, and state-specific excise policies which control pricing, distribution, and advertising (prohibiting direct liquor ads).

Environmental Compliance

The company complies with various environmental laws and the Indian Boilers Act, though specific ESG spend figures are not disclosed.

Taxation Policy Impact

The industry is subject to extremely high excise duties (INR 1,740.46 Cr in FY25, which is ~55% of gross revenue) and state-specific tax regimes.

Legal Contingencies

The company is involved in trademark litigation which led to elevated legal costs in Q1 FY26; specific case values are not disclosed in the provided text.

⚠️ Risk Analysis

Key Uncertainties

The Imperial Blue acquisition introduces integration risks and execution challenges. Regulatory shifts in Andhra Pradesh (30% of revenue) remain a primary uncertainty for volume stability.