Liquor stocks in focus as FSSAI raises ester limits; United Spirits, Radico, UBL back in spotlight

Liquor companies may see a positive long-term tailwind after the Food Safety and Standards Authority of India (FSSAI) raised the permissible ester limit—expressed as ethyl acetate—from 0.2 g/l of absolute alcohol to 3.0 g/l. The change, effective 1 June 2026, allows manufacturers more flexibility to enhance aroma, flavour, and overall sensory quality, while staying within safety standards.

The regulatory update comes alongside strong sectoral performance in Q2FY26, according to Nuvama Wealth Management, which has reiterated a Buy rating on key alcohol stocks. The brokerage highlighted an 11.5 per cent year-on-year revenue growth for the sector and a 32.5 per cent jump in EBITDA, driven by premium mix, better pricing, and stable raw material costs. Andhra Pradesh emerged as a major growth driver due to reopening and tender-led demand, partially offsetting challenges in Maharashtra and Telangana.

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United Spirits Ltd closed Thursday’s session at Rs 1,444.00, with the company continuing to outshine peers on profitability. USL posted the strongest margin profile in the alco-bev space, reporting a gross margin of 47.1 per cent and an EBITDA margin of 21.2 per cent. Premium-and-above (P&A) brands remained the key growth engine, with revenue rising 12.4 per cent year on year and volumes up 8 per cent. Management reaffirmed its outlook for double-digit top-line growth in FY26, supported by productivity improvements and sustained premiumisation.

Radico Khaitan Ltd, which closed at Rs 3,176.50, also delivered a strong Q2 showing. Revenue jumped 34 per cent YoY to Rs 1,490 crore, while EBITDA climbed 46 per cent to Rs 240 crore. Overall volumes surged 38 per cent YoY, led by exceptional momentum in Andhra Pradesh. P&A volumes touched their highest-ever quarterly level, driving a richer mix. The brokerage expects continued margin expansion and further debt reduction through FY27.

United Breweries Ltd ended the day at Rs 1,695.50. Despite weather-related disruptions and temporary brewery shutdowns, the premium portfolio posted 17 per cent growth, enabling the company to capture incremental market share. For the second half, analysts expect 5–6 per cent volume growth and 4–5 per cent pricing gains, supported by improving demand and a steady premium shift.

Tilaknagar Industries closed at Rs 471 on Thursday. The company reported Q2 revenue of Rs 40 crore and volume growth of 16.3 per cent. Tilaknagar recently received CCI approval for the Imperial Blue acquisition and entered the premium malt category with Seven Islands Pure Malt, signalling a strategic move to strengthen its presence beyond the mid-priced segment and align with the industry's premiumisation trend.