Which Alcoholic Beverages Stocks Are Deep Value Picks in Week of May 31, 2026?

Sector Pulse

The Alcoholic Beverages sector exhibited a MIXED demand environment in Q3 FY26. While premiumization remains a structural tailwind, volume growth was uneven. RADICO and TI delivered top-line performances, with RADICO hitting record revenues of ₹1,546.7 Crore (+19.5% YoY) and TI surging 90.5% YoY to ₹664 Crore (aided by the Imperial Blue acquisition). Conversely, ABDL and UBL faced volume pressures; ABDL's mass premium segment declined due to regulatory disruptions in Telangana, and UBL saw a 1.3% volume drop due to a colder-than-usual winter.

Catalysts Playing Out Across the Pack

The dominant theme across all four constituents is Value Added Product Mix Shift. ABDL's Prestige & Above salience reached 48.5%, RADICO's P&A revenue share hit 73.6%, and UBL's premium volumes grew 23% YTD. This premiumization is driving 222 to 350 bps of gross margin expansion. Additionally, New Product Or Brand Launch is highly active, with ABDL expanding its luxury portfolio, RADICO targeting ₹500 Crore from luxury brands, and UBL launching Kingfisher Smooth. Geographical Expansion is also notable, as ABDL targets 35 countries and TI leverages its new pan-India distribution network.

What Managements Are Guiding

Despite near-term volume hiccups, managements are universally CONFIDENT about structural margin expansion. ABDL raised its FY28 EBITDA margin guidance from 15% to 18%, citing backward integration benefits. RADICO reaffirmed its target to become debt-free by FY27 while guiding for 125 bps annual margin expansion. UBL raised its capex intensity to a "high single digit" percentage of sales to fund brewery network optimizations.

Sub-Sector Aggregates

The sector's profitability metrics are expanding. The EBITDA Margin Range spans from 11.4% (UBL) to 17.2% (RADICO), with all four constituents firmly in double digits. Furthermore, Gross Margin Expansion is a key highlight, with RADICO and UBL reporting 350 bps and 222 bps of expansion, respectively, driven by benign raw material costs and premiumization. YoY Revenue Growth showed wide dispersion, from ABDL's 2.8% to TI's acquisition-led 90.5%.

Shared Risks (9-type taxonomy)

The sector faces elevated regulatory risks. The introduction of Maharashtra Made Liquor (MML) caused a 20-25% industry decline in the state's prestige segment, impacting RADICO and TI. Additionally, policy changes in Telangana and Karnataka disrupted volumes for ABDL and UBL. climate risk materialized for UBL, where a cold winter dampened beer demand. commodity risks remain low but present, with managements monitoring ENA and glass prices, though current trends are benign.

Bottom Line

The Alcoholic Beverages sector is successfully navigating volume volatility by leaning heavily into premiumization and operating leverage. While regulatory interventions in key states like Maharashtra and Telangana pose near-term hurdles, the structural margin expansion story remains intact.