Indian AlchoBev makers to grow 10-12% on premiumisation and price growth in FY26

New Delhi: Indian alcoholic beverage makers are likely to record a double-digit revenue growth of 10-12 per cent in the current fiscal, helped by growing premiumisation and price increases approved by various state governments, according to a report by rating agency Icra.

However, on the volume side, the report expects a low single-digit growth of around 1-2 per cent in FY26.

The agency also expects a higher volume growth for the beer segment compared to spirits, including whisky, among others. “The beer segment is projected to outperform spirits, with volumes forecast to grow by 4-6 per cent in FY2026, continuing the trend from the previous year due to steady demand,” the report said.

In contrast, the spirits segment, comprising Indian Made Foreign Liquor (IMFL) and country liquor, may see a volume decline largely on account of higher taxation and increased selling prices.

It expects a stable operating margin (OPM) of 13-14 per cent backed by price hikes and steady input costs.

“The OPM witnessed a 100 bps expansion in FY2025, reaching 13.9 per cent, as price hikes granted by various state governments helped offset the increase in non-basmati rice prices, one of the feedstocks for spirits manufacturing,” the agency said.

The report, based on an analysis of leading Indian AlcoBev companies, said these manufacturing companies undertook moderate capital expenditure (capex) amounting to 3-4 per cent of operating income (OI) in FY25.

“This is expected to increase to 4-5 per cent in FY26 and FY27 due to the ongoing capacity additions,” it said.

“Despite the rise in capital expenditures, leverage and debt coverage metrics are projected to remain healthy, with total debt/ OPBDITA of 0.5-0.7 times and interest coverage ratio of 19-21 times for FY26, supported by robust cash accruals.”