Associated Alcohols and Beverages Ltd – A Diwali Pick by HDFC Securities

October 17, 2025: HDFC Securities’ research is one of its major strong points. Backed by a robust institutional research team, the recommendations of HDFC Securities come with intensive research and analysis. HDFC Securities has come up with its list of Diwali picks, and if you are looking to add sectoral diversification to your portfolio, there is one recommendation that can be an excellent pick for your investment. The shares of Associated Alcohols and Beverages Ltd (AABL) have been witnessing robust growth as the company focuses on premiumisation and market expansion

The company has newly launched products, including Nicobar Gin and Hillfort Blended Malt Whisky, which have received positive market feedback, adding to the company’s share growth.

Company Overview

Associated Alcohols and Beverages Ltd was established in 1989 and is the flagship entity of the Associated Kedia Group. The company operates in the alcohol distribution sector and is headquartered in India. AABL’s portfolio spans various segments, including extra neutral alcohol (ENA), potable alcohol, grain spirit, rectified spirit, and IMFL. The company leverages integrated operations with on-site production facilities and is expanding its presence across multiple states, reflecting a growing influence in India’s alcoholic beverages market.

Recent Stock Performance

On October 17, 2025, shares of Associated Alcohols and Beverages Ltd were trading at ₹1,067.25. The shares have shown steady performance and have risen by close to 6% in the past week. The trading volume has been quite healthy, and the total market capitalisation of the company stood at 2,028.31 crore so far.

Fundamentals and Valuation of the Stock

The CAGR of Associated Alcohols and Beverages over the past decade has been a robust 24%. The EBTIDA and PAT of the company stood at 14% and 15% respectively, for the same period. Thus, the return ratios have remained attractive.

Given that there has been a steep rise in the cost of raw materials, there has been notable stress on the gross margins, but despite that, the company has been able to manage the increased costs by passing them on to the customers, owing to its long-standing goodwill with them.

Having said that, the recent quarters have witnessed a correction in the price of the raw materials. Coupled with improved realisations, it is expected that there will be further improvement in the gross margins.

Key Price Levels to Watch

While the LTP is ₹1,010, and the target price is ₹1182, the recommended buy range by HDFC Securities is ₹1,008-1,035

What Makes AABL a Preferred Stock

The alcohol sector in India is quite dynamic and vibrant. Despite being $200 billion in size, the sector continues to grow at a CAGR of more than 7.2% (expected for the next five years). Besides beers, the growth trends of other liquors, including wine and whiskey, are also expected to rise in the next five to ten-year period. AABL is a critical part of the industry, and what makes AABL a leading stock is the company’s ability to expand and drive results.

The company has an integrated business model that provides a strategic edge along with an on-site ENA, bottling, and ethanol plants. This ensures that there is seamless raw material access and optimised procurement.

The company has also shown positive outcomes with a market share of 20%-25% in Madhya Pradesh, which is its core state. When this is combined with a growing presence in Kerala, Chhattisgarh, Delhi, and West Bengal, it sets a solid foundation for pan-India expansion.

The company is also expected to continue this growth. Its premium alcohol segment is expected to drive revenue growth further. It is anticipated that the proprietary IMFL products will expand at 15%-18% and licensed IMFL at 12%-15%.

Risks to Consider

Investors should keep an eye out for regulatory factors and raw material price fluctuations. They should also zero in on the fact that there exists a concentration of revenue in some regions.