TI Q2 FY27 Earnings Call: Guides 16-18% EBITDA Margin by FY29, Rs. 25 Cr Quarterly Inflation Drag

TI held its Q2 FY27 earnings call on October 30, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Hypergrowth on Imperial Blue Consolidation; Inflation Weighs on Margins

• Net revenue of Rs.1,035 cr, +173% YoY — Rs.1,033 cr (+172%) adjusted for subsidy; overall volumes grew 160% YoY and 2% QoQ, with QoQ flattish due to higher primary sales in Q1 FY27 in states that exited TSMA in Q4 FY26 or by June 2026.
• EBITDA of Rs.148 cr, +146% YoY at 14.3% margin — adjusted for subsidy: Rs.146 cr, +143%, 14.1% on the combined business; management estimates ~16.5% excluding inflation impact.
• PAT (adj. exceptionals and acquisition-related amortization) of Rs.68 cr, +30% YoY at 6.6% margin (adj. subsidy: Rs.66 cr, +26%, 6.4%); ~9% excluding inflation and subsidy.
• Gross profit (adj. subsidy) of Rs.432 cr at 41.8% margin — vs 42.1% in Q1 FY27; management estimates ~44% excluding inflation impact.
• NSR moderated 0.75% QoQ to Rs.1,174/case — but rose 3.2% YoY (vs Rs.1,138 in Q2 FY26); H1 FY27 NSR of Rs.1,179 grew 4.2% over H1 FY26 (Rs.1,131).
• Exceptional expense of Rs.11 cr in Q2 FY27 — mainly TSMA fees and integration-related costs; A&P reinvestment rate rose 61 bps QoQ on festive-season ATL/BTL execution.
• Input-cost inflation is a key risk — packaging costs (particularly glass) rose meaningfully over the last two quarters on geopolitical tensions, and ENA prices turned inflationary exiting Q2 FY27 on rising fuel and grain costs.

Share Gains Across Imperial Blue and Mansion House; Tamil Nadu Reforms a Watch Item

• Secondary volume growth QoQ: Imperial Blue Whisky +8.5%, Mansion House Brandy +7.1% — prestige & above market share gains of 100 bps (Imperial Blue) and 70 bps (TI) QoQ, with Imperial Blue share up across 17 states (notable gains in Karnataka, Andhra Pradesh, Uttarakhand, Assam, Rajasthan).
• Karnataka excise reforms benefited both brands — Mansion House was the highest-selling brand in Karnataka in September 2026; Imperial Blue posted its highest-ever quarterly volumes with share crossing 40% (+900 bps QoQ).
• Tamil Nadu early reform signals — Mansion House Reserve grew 25% QoQ and 50% YoY in September 2026 (highest-ever volume month); management is confident TI — the largest prestige & above brandy player in India — will be among the biggest beneficiaries of any Tamil Nadu reform.
• Tamil Nadu volume headroom is large — prestige-and-above brandy volumes (mainly Mansion House) peaked at ~3 million cases historically (period unspecified); current run-rate is below 0.5 million cases as of Q2 FY 2026-2027.
• No reform-driven volume guidance — when asked about realistic Tamil Nadu volumes over the next 2-3 years (Nuvama asserted reforms will "100% happen" in that window), management said it is difficult to predict how regulatory changes will pan out and did not provide a volume forecast.
• White spirits geography context — management (Amit Dahanukar) stated the largest white spirits markets are UP, Maharashtra and Rajasthan; the category is not large in South India where Tilaknagar operates, though it is growing there (response to Nuvama's observation of explosive white spirits growth at Radico and United Spirits).
• Brandy competition contained — significant share gains in Karnataka (a lighthouse market); in Telangana and Andhra Pradesh TI retains historical market shares, as new entrants (analyst query cited Radico, ABD and United Spirits) are concentrated in popular/below price segments.

TSMA Transition Nearing Completion; Acquired Distribution Being Leveraged

• Imperial Blue volumes held near 2 million cases — 2 million cases sold in May-June 2026 (Q1 FY 2026-2027); Q2 FY 2026-2027 volumes were "very close" to that level, attributed to seasonality from festivals in north India.
• TSMA transition on track — states transitioned out of TSMA under TI operations have been stabilized; the last remaining state will be transitioned by end of FY27.
• Distribution build-out "early days" — Imperial Blue launched in Kerala (October 2026) with a Tamil Nadu launch upcoming; Imperial Black introduced in Uttar Pradesh and Meghalaya; Mansion House relaunched in Daman & Diu and Madira Rum launched in Uttarakhand.
• House of TI luxury rollout planned — a luxury portfolio from House of TI will be rolled out in Q3-Q4 FY 2026-2027 across many northern states where Imperial Blue is widely distributed; luxury brands Monarch Legacy Edition Brandy, Seven Islands Pure Malt Whisky, and Samsara Gin (owned by SSL) expanded into Assam.
• Samsara (SSL) grew 50% in H1 FY27 vs H1 FY26 — business is H2-skewed: H1 expected to contribute ~35% of FY27 full-year business vs ~65% in H2.
• Brand marketing stepped up — Mansion House and Monarch Legacy Edition showcased at Times Square, New York for 72 hours (2,500+ plays, 1.2 mn+ visitors); first ATL campaign launched for Imperial Blue packaged drinking water under "Because Men Will Be Men."

~Rs.25 cr/Quarter Inflation Drag; Telangana Overdues Inflate Working Capital

• West Asia crisis impact quantified at ~2.5% of gross margin — CMD Amit Dahanukar measured raw material inflation versus Q4 FY 2025-2026, cited as the pre-crisis baseline quarter; net impact estimated at ~Rs.25 crore per quarter in both Q1 and Q2 FY 2026-2027.
• The ~250 bps (~Rs.25 crores) adjusted EBITDA margin impact in Q2 FY27 is entirely net inflationary — subsidy aside; adjusted EBITDA margins are independent of subsidy levels.
• Subsidy income fell to ~Rs.2 crores in Q2 FY27 from ~Rs.20 crores in Q1 FY27 — management will not guide on expected future subsidies.
• Price increases taken in northeastern states — Assam and Meghalaya done, Arunachal Pradesh underway; management is actively discussing increases with the governments of Telangana and Andhra Pradesh, but no timeline given for passing inflation to consumers.
• Price/mix guidance of ~200 bps (period unspecified) — underpinned by the assumption that with a pan-India presence across 28+ markets, at least a couple of states take price increases every year.
• Net working capital days at ~65 days (gross, annualized) as of Q2 FY27 — inclusive of ~Rs.550 crores of Telangana overdues; Telangana is working on a 6-month overdue cycle; excluding potential recovery of overdues over the next 12 to 24 months, net days expected to remain at similar levels (~65 days).
• H1 FY 2026-2027 operating cash flow was negative — driven by higher inventory and receivables (raised by analyst Mudit Daga, Wallin Holdings); management cautioned the ~5-day increase vs March 2026 is not like-to-like since Imperial Blue was acquired on a 0 receivables, 0 payables basis with only 4 months of overdues in the books by March 2026.

Rs.22 cr Bet on 100% Blue Weber Agave Tequila at Accessible Luxury Price Point

• Rs.22 crore agreed investment for a 30% stake in Black Tiger Distilleries — maker of Bodega Suprema No. 5, a 100% blue Weber agave tequila bottled in Jalisco, Mexico; Rs.6 crore already invested as of Q2 FY 2026-2027, with the remaining Rs.16 crore over the next 12 months (extending into FY 2027-28).
• Strategic partnership with PFA and Mancha Group — PFA is a Mexico-based family-owned tequila manufacturer; Mancha Group is one of India's leading alcohol distributors.
• Tequila category grew at a 60% CAGR over the trailing 5 years — Bodega plugs the gap at an accessible luxury price point, already live in 4 markets (Maharashtra, Karnataka, Goa, Delhi).
• Rollout "still pretty early days" — first launched in Maharashtra with stock just dispatched to three additional states; retention ratios and repeat ordering described as impressive; management has "high expectations" of driving a very strong tequila business out of India, positioned at 100% Blue Weber agave in an affordable luxury price point where it sees no other significant brand in this liquid profile.
• Capital allocation remains opportunity-led and disciplined — targeting brands and businesses with strong consumer propositions, differentiated liquid, attractive growth potential, and the ability to scale through Tilaknagar's distribution and operating platform.

FY27 Volume Guidance Reaffirmed; 16-18% EBITDA Margin by FY29

• FY27 guidance maintained — high single-digit to low double-digit volume growth for the combined business in FY27; for the existing (ex-Imperial Blue) business, mid-to-high single digit growth, confident on the lower end.
• Imperial Blue double-digit growth for FY27 reaffirmed — asked (DAM Capital) whether the run rate implied 20-24 million cases for FY 2026-2027, management reiterated double-digit growth in the IB business for the entire year FY27 and sees no risk to that number.
• Beyond FY27 guidance maintained — including new launches planned for FY28 onwards, mid-teens volume growth and mid-to-high-teens revenue growth over the next couple of years (FY28-FY29).
• Consolidated EBITDA margins of 16-18% expected by FY29 — with upward bias on the range; H1 FY27 margins were under pressure, but management is confident of margin expansion via premiumization, cost optimization, supply chain efficiencies, and operating leverage.
• UK FTA benefit quantified at ~100 bps on a consolidated, full-year basis — embedded in the upper end (18%) of the 16-18% margin guidance for FY29; no benefit realized in Q2 FY 2026-2027 as the company was still sitting with existing inventory, and management declined to confirm whether benefits begin from Q3 FY 2026-2027.
• Net debt-to-EBITDA expected below 1x by March 2029 — gross debt Rs.2,202 cr / net debt Rs.2,074 cr as of 30 September 2026, slightly lower vs June 2026; management targets net debt at March 2027 below March 2026 levels.
• H2 FY27 margin expansion measured against H1 FY26 (YoY basis) — assumes no significant further inflation; a large spike like the one seen in late Q4 FY26/early Q1 FY27 could potentially impact FY27 margins; management is fairly confident of YoY margin expansion FY28 onwards. On the UK FTA matter, requisite disclosure has been made to the stock exchanges, and management is working with industry bodies and the relevant government authorities for an early resolution.