Tilaknagar Industries Ltd

NSE:TI

Q1-2026 Earnings Call

[Operator]

Ladies and gentlemen, good day, and welcome to Tilaknagar Industries Conference Call. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Siddharth Rangnekar from CDR India. Thank you, and over to you, sir.

[Siddharth Rangnekar]

Thank you. Good morning, everyone, and thank you for joining us on Tilaknagar Industries Limited's Quarter 1 FY '26 Earnings Conference Call.

We are joined today by Chairman and Managing Director, Mr. Amit Dahanukar; President, Strategy and Corporate Development, Ameya Deshpande; and Chief Financial Officer of the company, Mr. Abhinav Gupta. We shall commence with views from Mr. Dahanukar on the strategic performance and financial highlights, followed by the brief commentary from Mr. Deshpande on the acquisition of Imperial Blue business division. This shall be followed by an interactive question-and-answer session.

Before we commence, I would like to state that some of the statements made on today's call could be forward-looking in nature and a disclaimer to this effect has been included in the results presentation that was shared with you earlier, and which is also available on the stock exchange website.

I would now like to invite Mr. Dahanukar to make his opening remarks. Over to you.

[Amit Dahanukar, executive]

Good morning, everyone. Happy to have you all join us on this earnings call to discuss the quarter 1 FY '26 results. I will first provide a brief update on the current quarter's performance, which will be followed by Ameya taking you through the recently announced acquisition of Imperial Blue.

After a challenging yet rewarding year, I'm pleased to share that we've sustained a strong industry breeding growth trajectory supported by consistent and progressive changes in excise policies in some of our key states.

During quarter 1, our volume performance was strong, with growth at 26.5% year-on-year. Our NSR increased from INR 1,182 per case in quarter 4 FY '25 to INR 1,193 per case this quarter. The Southern region has seen strong growth momentum in quarter 1 with market share improvement for TI in each of the key markets.

We continue to be the third largest IMFL P&A player in Telangana and Karnataka, both states where whisky contributes more than 80% of IMFL consumption. Karnataka continues to see strong growth momentum in the P&A segment for the entire industry on the back of excise duty reduction during the middle of previous fiscal.

Our portfolio front, our luxury and super premium portfolio is showing promising signs. Monarch Legacy Edition brand, our first luxury foray, is now available in Maharashtra, Goa and Pondicherry. Quarter 1 has also seen the commencement of our distribution of Samsara brands on the back of our usership agreement with Spaceman Spirits Lab, our investee company. Spaceman's premium portfolio featuring Samsara Gin, Sitara Rum and Amara Vodka is well positioned to be a key growth driver with our super premium segment.

As part of our strategy, we will leverage our extensive and efficient distribution network to scale the reach of Spaceman brands across select Indian states and international markets, unlocking significant value over the coming quarters.

In terms of our strategic investment into Spaceman, you would have also seen the disclosure last week, wherein we have announced our investment of more than INR 10 crores in Spaceman, taking our shareholding to 21.36% from 12.98%. This investment was a part of the previously announced investment round in September 2024, along with an additional secondary acquisition, which we have made from some of the early shareholders.

Our agreement with Spaceman gives us the option to further invest or acquire additional stake from shareholders at a predetermined valuation subject to Spaceman attaining pre-agreed milestones.

Our mass prestige portfolio, led by Mansion House and Courrier Napoleon, continues to deliver strong performance. We remain committed to ensuring that brandy's Share of Voice reflects its leadership in market share. As mentioned previously, we are stepping up our A&SP investments, which are already beginning to shift consumer perception positively. In line with this strategy, we have recently collaborated with one of South India's biggest superstars for Mansion House packaged drinking water, showcasing its scale, strength and sincerity. With continued focus on marketing and innovation, we are confident in positioning brandy as a more aspirational and inclusive category.

While brandy continues to be our dominant category in the current portfolio, we have also made an entry into semi-premium whisky segment in the recent past with the relaunch of Mansion House whisky in a new avatar. In addition to initially launching Mansion House whisky in some Northeastern states, we are now available in Telangana and some East India states like Odisha and West Bengal.

On the legal front, with respect to the trademark litigation, it gives me great pleasure to reiterate that the Honorable Bombay High Court has upheld TI's ownership of Mansion House and Savoy Club trademarks, ensuring continued uninterrupted and exclusive sale under these brands.

Before I hand over to Ameya to take you all through the Imperial Blue acquisition, I will briefly talk about our financial performance. We saw a strong 31% year-on-year growth in net revenues. Adjusted for the subsidy income of INR 38.6 crores, the growth was still robust at 20.5%. EBITDA in quarter 1 stood at INR 94 crores. Adjusted for subsidy income, this stood at INR 56 crores, a year-on-year growth of 25%. EBITDA margin stood at 15.1%, an expansion of 55 basis points compared to last year despite higher than usual legal costs on account of the trademark litigation, which was at its peak during this period.

On the input side, ENA and glass prices have remained stable and we are hopeful of a continued conducive input cost environment. Our focused drive on cash flow management continues, and we now stand at a net cash level of INR 163 crores, showcasing our balance sheet strength.

I would also like to provide an update on the recent announcement we have made regarding our wholly owned subsidiary, Prag Distillery. While we recently received extension of the validity of the letter of intent for expansion of our bottling capacity from the Government of Andhra Pradesh, we have now received approval from our Board of Directors to go ahead with the expansion for an investment of around INR 59 crores. This investment includes the INR 34 crores on account of the license fees and interest to be paid to the government. Post this expansion, Prag capacities would have increased to around 36 lakh cases per annum, an increase from around 6 lakh cases per annum as of date.

I will now hand over to Ameya to take you through some of the salient points around our recently announced acquisition of Imperial Blue.

[Ameya Deshpande, executive]

Thank you, and a very warm welcome to everyone joining us today. As you would be aware, we have on the 23rd of July 2025, executed definitive agreements with Pernod Ricard India to acquire the Imperial Blue business division on a slump sale basis for a lump sum consideration basis enterprise value of approximately EUR 413 million. This amount includes a normalized working capital of approximately EUR 70 million and a deferred consideration of EUR 28 million payable at the end of 4 years. That is in FY 2030. The consideration payable to Pernod would be subject to certain closing adjustments and the deal is subject to regulatory approvals.

IB is the third largest whisky brand in India by volume for the 25-plus years of brand heritage. It sold more than 22 million cases across 27 states and union territories, along with a strong international footprint. The acquisition of IB is a significant strategic step for Tilaknagar Industries as it will not only broaden the product and geographical footprint, but also serve as a launch pad for TI's premium portfolio foray.

On the financials front, IB clocked a net revenue in excess of INR 3,000 crores for the trailing 12 months ending March 2025. We foresee a good number of operational synergies to play out post the acquisition, which will enable us to increase EBITDA margins in the IB business division as well as at a combined level.

As a part of the transaction, TI will be getting 16 manufacturing units, of which 2 units will be owned. Further, TI will enter into a TSMA with Pernod, whereby the seller has agreed to help in smooth transitioning of the business post-closing.

We will also be entering into a long-term supply agreement with Chivas Brothers for the concentrated alcoholic beverage and essential raw material for manufacturing the IB products.

In terms of financing the acquisition, we are looking at an optimal mix of equity and debt. We have already announced the Board approval for a preferential issue of almost INR 2,300 crore. The balance will be funded through debt and further expect to reduce debt over time such that the net debt-to-EBITDA falls below 1x by FY '29.

Since the deal has not yet closed and remains subject to confidentiality obligations, we are unable to share additional details currently. And hence, we kindly request that participants refrain from asking any further questions related to this matter.

With that, I would now request the operator to open the call for Q&A.

[Operator]

[Operator Instructions] First question is from the line of Abneesh Roy from Nuvama Wealth.

[Abneesh Roy, analyst]

Yes. Sorry, sorry. Yes, firstly, congrats on very good growth. I wanted to understand on the demand side, you have done quite well, highest ever Q1 volumes in the last 9, 10 years. But when we see a lot of other discretionary segment, there is a challenge. And now we have seen job addition in the IT sector going slow. TCS, for example, 12,000 job losses have happened. And across the IT sector, there is a challenge. And IT -- and South India clearly is the hub of IT sector jobs. So from an outlook perspective, would you be slightly concerned on your current business? And the market share gains, if you could talk about it, what has really led to this kind of performance? So near term, I think you will continue to do well. So if you could talk about what are the key drivers for the market share gains.

[Amit Dahanukar, executive]

So Abneesh, I think we are not seeing any letup in demand. I think, as you would have seen from the quarter 1 volume numbers, growth in excess of 20%, so quite robust offtake over there, and we are not seeing any visible slowdown in any of the Southern states as of now. And I'd like Ameya to address in terms of market share gains, perhaps he will add more insight state-wise.

[Ameya Deshpande, executive]

So Abneesh, in terms of market share gains, see, we've seen significant market share gains across all key states, right, whether it is a state like Karnataka, which saw an excise duty reduction in the second half of last financial year, right? So we have literally seen market shares over there grow significantly. That's predominantly on account of good growth that the Prestige & Above segment has seen in the industry, right? And we've kind of told those kind of growth as such.

So just talking specifically about Karnataka, we today are more than 2% of the overall IMFL market. And when it comes to P&A IMFL, we are almost 1/4 of the entire market, right? So that is the kind of growth that we have seen in market share. Now similar, let's take, for instance, Telangana, Telangana, we've seen more than 50 basis points Y-o-Y kind of growth in market share. So all of which are on the back of a very strong consumer franchise from a brand perspective. Obviously, we are investing more even in terms of A&SP and so on and so forth, right? So a good amount of growth coming from there as well, as well as the new brands that we are launching. So Mansion House whisky is doing fairly well in the Northeast. So it's a combination of multiple things in terms of our market share growth.

[Abneesh Roy, analyst]

Sir, last question on -- in Maharashtra, what kind of presence you have? And post the very sharp tax hike, if you could speak on the industry and for you, how do you see next 2, 3 quarters?

[Amit Dahanukar, executive]

So Maharashtra, recently, they have come out with an MML policy also, Maharashtra Made Liquor, which would be available for distilleries and bottling units in Maharashtra. We are still examining because the circular has come out very recently. So we are examining the eligibility criteria, but that could perhaps be an interesting segment for us to operate in, provided, of course, we are eligible.

And in terms of our presence in the state, as it stands with the current portfolio, we are extremely small in Maharashtra, it's low single-digit saliency for us as a part of our overall portfolio.

[Abneesh Roy, analyst]

So that part of the business, do you see any challenge? And you also mentioned whether you will be eligible for MML. So this will be decided essentially by the government? Are the other rules clear? So does that make it possible for you to understand whether you are eligible or not or it's completely government's discretion?

[Amit Dahanukar, executive]

No. So right now, we have not examined the circular in detail. So I would refrain from making any comment regarding our eligibility.

[Abneesh Roy, analyst]

And what kind of impact do you think on the Maharashtra business? I know it's small, but still, if you could talk about ex of the MML because that's not in your hands. Once the eligibility comes, then it will be clear. Ex of that, do you see double-digit decline, volume decline for your part of the business? You are small, but still the challenge is there, right?

[Ameya Deshpande, executive]

Yes. But we haven't really examined the impact of the revised duty structures, right? So from that perspective, really not in a position to answer this question. And in any case, like you mentioned yourself, it's not needle moving, really.

[Abneesh Roy, analyst]

Yes. But your prices would have changed, right? I'm just asking whether your prices have been passed on because of the taxes that would have been done, right?

[Ameya Deshpande, executive]

Yes. So basically, there will be an impact on business on account of price increase, right, but nothing significant.

[Operator]

Next question is from the line of Naitik from NV Alpha Fund.

[Naitik Mutha, analyst]

Sir, I wanted to know, first, if I adjust for the subsidy income during the quarter, and I do that same for the last year's Q1, I see there's a drop in gross margin. So is my understand correct one? And if yes, then what has led to this drop in gross margins, if I adjust for the subsidy income?

[Ameya Deshpande, executive]

So you're comparing which quarter to which?

[Naitik Mutha, analyst]

Y-o-Y, so 1Q '25 versus 1Q '26.

[Ameya Deshpande, executive]

Yes, yes. So this is on account of a reduction in the NSR, right, in Andhra that we have seen. This is on account of that.

[Naitik Mutha, analyst]

So this will continue. I mean, the current gross margin, if I adjust for the subsidy, that rate will continue for the coming quarters because the prices we have corrected?

[Ameya Deshpande, executive]

Yes. So you can use this as the base for any incremental uptick in margins going forward.

[Naitik Mutha, analyst]

Right. Got it. Sir, my second question is how much of the subsidy that we're getting from Maharashtra Government is still sort of remaining, if you could mention about that.

[Ameya Deshpande, executive]

So as we've mentioned earlier as well, this is not something that we can respond to. Yes, there is some additional subsidy that is expected, but frankly, not in a position to quantify anything.

[Naitik Mutha, analyst]

Got it. And we book it as we receive it, right? This is the cash that we receive and then we book it in our P&L.

[Ameya Deshpande, executive]

Yes, that is correct.

[Naitik Mutha, analyst]

Got it. Sir, my next question is in terms of the Northeast, if you could give me the market size and the potential that we can realize from there from the whisky that we've launched recently?

[Ameya Deshpande, executive]

Yes. So as it stands, our East and Northeast saliency as a total percentage of overall volumes is in the mid-single digits range, early to mid-single-digit range. Obviously, with Mansion House growing in these states, we do expect to increase the saliency for this region. As such, now if you go to see Mansion House whisky, right, purely in a couple of states from East and Northeast, the segment itself is a decent 6 million case market, right? So there is a big play over there at that price point within whisky. But in terms of where we get to by the end of it, that we'll see over time, right? But yes, we do see East and Northeast playing an important role for us with our own portfolio as well as with the impending acquisition of IB.

[Naitik Mutha, analyst]

Right, right. And what would be our share currently, sir, out of the 6 million market roughly?

[Ameya Deshpande, executive]

No, it will be in low single digits as of now.

[Naitik Mutha, analyst]

And sir, my last question is just wanted one clarification on the acquisition. The INR 3,000 crore revenue, you mentioned that is net of excise duty or it includes excise duty?

[Ameya Deshpande, executive]

No, it's net of excise duty.

[Operator]

Next question is from the line of Shirish Pardeshi from Motilal Oswal.

[Shirish Pardeshi, analyst]

Just one question. On the integration, you did mention that 6 months' time line is required for Imperial Blue integration. What are the things at what stage we are if you can just give some sense?

[Ameya Deshpande, executive]

So see, the thing is that because we are still awaiting closure of the transaction, there is little information that we can provide on this front, except for the fact that there is a transition services agreement, which also includes manufacturing within this, whereby the seller would assist us in undertaking business as usual till the time all registrations and everything come into our hands, right?

Along with that, there are certain other things which form a part of the slump sale where we are getting certain resources from them. But again, reiterating the same fact that because of confidentiality restrictions, not in a position to respond to those either.

With regards to business as usual from a liquid perspective, we do have a long-term supply arrangement with Chivas Brothers for procuring the can, which is an important ingredient of Imperial Blue.

[Shirish Pardeshi, analyst]

Ameya, I got that what you're saying. You mentioned that it's 6 months' time line. Are you optimistic or are you pessimistic or you really think in 6 months, everything will get in your hand? That's the only question I have.

[Ameya Deshpande, executive]

No. So I think as we move along, we will know. But yes, you can consider that 6 months is the integration time that we are looking at.

[Operator]

Next question is from the line of Suvaan Mittal from MFC.

[Suvaan Mittal, analyst]

I have only 2 questions lined up. On a quarter-on-quarter basis from Q4 to Q1, our EBITDA margin has decreased extra subsidiary -- subsidy from 16.6% to 15%, even though our gross margins have increased on a quarter-on-quarter basis like by 49% to 51%. So if you give some color that why the increase in gross margin has not translated to EBITDA, extra subsidy I'm talking?

[Ameya Deshpande, executive]

So firstly, let me just clarify. The gross margin has come down from 47.1% to 46.9%. Even in the gross margin, you need to adjust the subsidy income, right? So that's the first thing. Secondly, with respect to why the reduction in EBITDA margin from 16.6% to 15.1%. As you would know that there have been higher legal costs that we had to undergo in this quarter, right, as well as A&SP reinvestment rates was slightly more than what they were in the previous quarter and add to that, the fact that a little bit of operating leverage came into play. That's the reason why you're looking at a slightly lower EBITDA margin.

[Suvaan Mittal, analyst]

Okay, sir. My second question being, when should the capacity increase at the Prag Distillery expected to be completed? And will it somewhere benefit us in our logistics cost because our major business is in Andhra and we are now increasing our capacity of a sizable amount over time?

[Amit Dahanukar, executive]

So Prag, we are confident that within 12 months, we'll be operating at the expanded capacities.

[Suvaan Mittal, analyst]

And any benefit you foresee, sir, on the logistics cost?

[Ameya Deshpande, executive]

No. So this will be more in the bottling charges itself that there will be benefits that come through, right? We are not quantifying the benefits. We've done the workings at our end, but we are not disclosing the workings, right? But these are significant benefits that we get on account of using our own wholly owned subsidiary or our own unit as a bottling unit.

[Operator]

Next question is from the line of Karan Kamdar from Choice. Due to no response, we're moving to our next participant. Next question is from the line of [ Rishabh from Sancheti Family ].

[Unknown Analyst]

Am I audible?

[Amit Dahanukar, executive]

Yes, you are.

[Unknown Analyst]

Yes. I just wanted to understand what are the possibilities for expansion in the EBITDA margin for the existing business? And like -- and what can be the driver for the same, sir?

[Ameya Deshpande, executive]

See, as we keep premiumizing, obviously, that will have an impact on EBITDA margins, right? Along with that, there are certain cost optimization initiatives that we are undertaking. Something that we've been speaking about over the past 3-odd quarters, right? These are yet to be fully baked in. It's happening and will continue to happen over the next couple of quarters. So there will be a certain level of savings or other margin expansion that you will see on that account as well.

As we keep launching the newer brands, okay, more premium brands across categories, you will see a little bit of an impact upfront from an A&SP reinvestment rate perspective as well. But from a long-term perspective, we do look at margins to hit our guided margins of around 16% to 17% or even beyond.

[Unknown Analyst]

And cost optimization that you mentioned, if you can just give some more flavor on, which line item this optimization will happen?

[Ameya Deshpande, executive]

So this will be predominantly in the COGS, right? So these relate to the packing material optimizations that we are undertaking, including on the logistics side of it.

[Unknown Analyst]

Okay. And whenever the legal cost decline, that will also help in the EBITDA margin, correct?

[Ameya Deshpande, executive]

Yes, yes. That's right.

[Operator]

Next question is from the line of [ Anjali Bajaj from Naredi Investments ].

[Unknown Analyst]

My question is regarding to how will you raise the money for Imperial Blue either internal accruals or through debt?

[Ameya Deshpande, executive]

No, so there is already a disclosure that we have made with respect to the equity fund raise, right? So the Board has approved a preferential issue to the tune of almost INR 2,300 crores, right? It goes into shareholders' approval shortly. And fairly soon, we'll have the funds raised through equity. Along with that, we have -- we are also raising debt for the balance portion. It's an optimal mix that we are using when it comes to funding this transaction of nearly 1:1.

[Unknown Analyst]

Okay. Okay. And my second question is what is the subsidy policy from government? Company will receive further quarters also, will you give me detailed reply on the subsidy matter?

[Ameya Deshpande, executive]

No, I think we have responded to the question already. There is nothing further that we can add to that -- to the -- in terms of a response related to this. Essentially, all that we can say is that the subsidy relates to the industrial promotion subsidy that has been provided by the Government of Maharashtra under the Package Scheme of Incentives 2007.

[Amit Dahanukar, executive]

And we are accounting for subsidy as it is received.

[Operator]

Next question is from the line of Karan Kamdar from Choice. Due to no response, we move on to our next participant. Next question is from line of [ Aditya Singh from Multibagger ].

[Unknown Analyst]

Am I audible?

[Operator]

Yes, sir.

[Unknown Analyst]

First of all congratulations on a great set of numbers. I had only one question and the question was regarding the tax incident. So when can we see the tax incidents coming back?

[Unknown Executive]

So our appeal with commissioner income tax is still under discussion. So we don't have any update on that. For prudent purpose, we suggest that from 1st July, you may assume full incident of tax. And as and when we have an update from CIT appeal, we'll get back.

[Unknown Analyst]

Okay, okay, okay. And if I can just ask another question, if the tax incidents come back, how can we still manage to be one of the biggest player in the IMFL or alco-bev industry?

[Ameya Deshpande, executive]

I think when it comes to our own cash flow generations, right, these are extremely strong irrespective, right? We are a growing business. We run the business in an asset-light model, right? So I think from an ongoing perspective, there is no concern on growth just because tax incidence comes up upon -- that's par for the course, right? That's the way business works. So we are not concerned about that aspect.

[Operator]

Next question is from the line of Arpit Shah from Stallion Asset.

[Arpit Shah, analyst]

Am I audible?

[Ameya Deshpande, executive]

Yes, Arpit.

[Arpit Shah, analyst]

Yes. Congratulation on a landmark acquisition you guys have completed. It's a quite leap in terms of where we were, let's say, almost 7, 8 years back from a debt-ridden balance sheet to a debt-free balance sheet and now going again to a very large acquisition. So I just wanted to understand once we've gone and paid a price of INR 4,100 crores, INR 4,200 crores for the acquisition, what was our valuation metrics or what was our guiding principle in coming to this number? And how should we look off for a payback for this number going ahead? If you can allude qualitatively or quantitatively, how should we look at it?

[Ameya Deshpande, executive]

No, so I think just to answer your question on the valuation metrics, obviously, as a part of the entire valuation process, we did look at multiple valuation methods, right, right from DCF to trading multiples, precedent transaction multiple, so on and so forth. But having said that, we won't be unfortunately be able to get into details in terms of how did we arrive at the numbers that we did. Given the scale of the business and given how much this adds to our own existing business from -- in terms of even synergies and providing us a presence pan-India and across categories, we felt that the value that was paid was the right value.

[Arpit Shah, analyst]

Sir, would it be fair to say that the margins that this portfolio has would be closer to what we make on the brandy side or it will be, let's say, in low double-digit or high single-digit margin?

[Amit Dahanukar, executive]

So while we can't specifically comment on margin profile, I think the management and the Board both believe that I think we have paid a fair price for the asset. And we are going ahead with the funding also in a prudent way. And the company feels that the potential acquisition is very transformative in nature and really can reshape the identity of a company from a regional brandy player to a national player with presence in 2 of the largest categories in IMFL.

[Ameya Deshpande, executive]

And if I'm to give any comfort on -- with regards to the financials and stuff, right, see, one thing is very clear that this is a cash EPS accretive transaction for us, right? Without getting into numbers, obviously, that's something that we'll get into post-closing. But needless to say, this is a cash EPS accretive transaction for us.

[Arpit Shah, analyst]

Got it. If you can just comment qualitatively, what are the kind of synergies we have between the brandy and the whisky portfolio and how should we look at in terms of synergies going ahead in terms of qualitatively in terms of distribution, raw materials or anything of that sort?

[Ameya Deshpande, executive]

So see, IB is a pan-India player with a pretty strong distribution and presence in Southern India, right? That's a known fact. And that is something that I think has tremendous synergistic benefits for us as well, right? So that is one piece of it. The second piece of it is that obviously from a team perspective or rather from an organization setup perspective, we are present in many of the states that IB sells in today, right? So these are the kind of synergy benefits that we get in terms of margin kickers from where the IB financials would be right now.

[Arpit Shah, analyst]

Got it. And in terms of volume growth, let's say, for the last couple of years, it has been almost flattish because the focus was not there for them to scale up these plan. How should you look in terms of volume growth going ahead, at least for this plan? Are there low-hanging fruits where we can scale up the volumes really fast?

[Amit Dahanukar, executive]

See, I think as part of the Ameya's opening remarks, we have shared a few details with regard to the transaction. I'm afraid at this stage since we are between signing and closing, we can't comment or share further details at this stage.

[Operator]

Next question is from the line of Daksh Malhotra from Aadriv Global.

[Daksh Malhotra, analyst]

And once again, congratulations on the acquisition of Imperial Blue, quite a landmark deal. So I had a couple of questions. First, in just continuation to the previous one, I understand that while we are closing, we can't disclose the margins, the existing margins, but can you sort of give some guidance given that we know the revenue is ballpark INR 3,000 crores, INR 3,200 crores for Imperial Blue, what can be the consolidated margins once the transaction is done, probably for FY '26 or FY '27?

[Ameya Deshpande, executive]

No, we are -- sincerely, we are very sorry, but we are not guiding towards the combined business as it stands today. We'll be more than happy to answer any questions once the closing happens.

[Daksh Malhotra, analyst]

Okay. Fair enough. And also for the transaction, we have done an equity fund raise, but the discount to the existing price was quite substantial. Was it -- usually, the trend is probably 10%, 12%, 15% from the CMP that to for a fund raise. Can you just sort of elaborate on the reasons behind giving such a heavy discount to the low price?

[Ameya Deshpande, executive]

No, I think it wasn't a discount to the floor price. If anything, it was at the floor price and the pricing for the pref issue was purely determined by the semi minimum pricing that works for preferential issues, which was essentially 10 trading days or 90 trading days VWAP, whichever is higher, right? And we went by that pricing. Frankly, it just so happened that it was at a significant discount, but that was the pricing methodology.

[Operator]

Next question is from the line of [ Nishitha ] from Sapphire Capital.

[Unknown Analyst]

Yes. Am I audible?

[Ameya Deshpande, executive]

Yes, you are.

[Unknown Analyst]

Yes. I just wanted to know what revenue guidance and margin guidance you are giving for FY '26 and '27.

[Ameya Deshpande, executive]

Sure. So in terms of the revenue guidance for FY '26, you're looking at mid- to high-teen kind of revenue growth for FY '26, followed by around mid-teen kind of growth for FY '27. With respect to margins, the margin guidance that we are providing towards is around 15% to 16.5% for FY '26. And for '27 onwards, you can look at 15.5% to 17.5%.

[Unknown Analyst]

Okay. And this is without taking into consideration the effect of the acquisition, right? So once you can give us the number, the margin guidance can change.

[Ameya Deshpande, executive]

Yes, yes. This is a steady-state business, pre-acquisition, yes.

[Operator]

Next question is from the line of [ Pranav Malhotra from Starship India ].

[Unknown Analyst]

Congratulations on a good set of numbers. My question was pertaining to the NSR. So what NSR do we expect for the year considering like it's come to [ INR 1,205 ] this time, as like you have product launches in H2, could you also throw some light on that, like the new product launches that you have and if your NSR will improve going forward?

[Ameya Deshpande, executive]

Yes. So you're looking at the NSR per case to increase from the current stage, which is around INR 1,193 per case. Right now that the base has been set from a pricing perspective, including the AP impact, you can consider an increase on the per case NSRs as such going -- so the range would be anywhere between, let's say, 1% to 2% growth in NSR per case on a yearly basis on existing business.

[Unknown Analyst]

Right. So around INR 1,190, INR 1,200.

[Ameya Deshpande, executive]

Yes, yes.

[Unknown Analyst]

Okay. And sir, my next question was regarding the revenue contribution of your royalty brands. Like could you please share that number?

[Ameya Deshpande, executive]

No, that's not a segregation that we provide currently. Having said that, it's a fairly small part of our revenues, very small.

[Unknown Analyst]

Right. But the growth expected there is really high, right? Like considering that you've increased the stake from INR 13 crores to INR 20 crores, the revenue growth there can be really high, right?

[Ameya Deshpande, executive]

Yes. These are high NSR products, right? So there is tremendous potential in that business in the entire Spaceman portfolio, right? So that's fair to say that there is good growth potential over there. But having said that, we are not guiding for Spaceman portfolio currently.

[Unknown Analyst]

Okay, sir. And regarding the volume you have achieved 32 lakhs in this quarter, I believe. So will this be the new base like for this year, like the run rate will be above 32 lakhs like per quarter?

[Ameya Deshpande, executive]

Yes, that's right.

[Unknown Analyst]

So like is it possible to give a yearly number, like for the year, like how many cases is the management expecting to sell?

[Ameya Deshpande, executive]

Yes. So like I mentioned in my earlier guidance statement as well, we are looking at high-teen growth for this year.

[Unknown Analyst]

So like 13.5 million to 14 million cases this year.

[Ameya Deshpande, executive]

Yes. Yes, closer to 14 million.

[Operator]

Next question is from the line [indiscernible] from Choice Institutional Equities.

[Unknown Analyst]

Congratulations for the good set of numbers. I wanted to understand if Imperial Blue business, is it going to attract a 50% excise duty or is it lower or any higher?

[Ameya Deshpande, executive]

It would be kind of similar to our existing business.

[Unknown Analyst]

Okay. Got it. And the second question would be, going forward, how do we look at the portfolio diversification? Currently, we were standing at 90% brandy heavy portfolio and we -- I think last quarter, you did mention we were looking at 80 to 20 diversification, 80 considering brandy. But now I think it is going to change with whisky coming in and Imperial Blue, of course. So what is the diversification going forward?

[Ameya Deshpande, executive]

Yes. So as you would see on Slide 16 of the earnings presentation, you will see that we have given a segregation of how the pro forma portfolio would look like, so essentially you're looking at 2/3 of the business being whisky in steady state -- current state business, right, brandy, having more than 30% saliency on top of that.

[Operator]

Next question is from the line of Amit Vora from [indiscernible] Consultants.

[Unknown Analyst]

Congrats on a good set of numbers. Just 2 questions. You mentioned that there were high legal charges. So if you can quantify that for the quarter? I'm sorry if I missed that if you've answered it.

[Ameya Deshpande, executive]

No, I don't think we'll quantify that, but there was a 100 basis points increase on a year-on-year basis. Let me just leave it at that.

[Unknown Analyst]

Okay. Just to understand because this is a one-off that was the whole point to understand that. Yes, that's helpful. Second thing, I understand you have mentioned that you don't want to give more details on the IB acquisition, just something which is related to FY '25 is on the margins, if you can just give a number on the EBITDA margin that IB has currently? Will it be possible if that can be given.

[Ameya Deshpande, executive]

I would if I could, but I can't, sorry. Well, we can only disclose the revenue number for the moment.

[Unknown Analyst]

Okay. Okay. Just one thing, if you can just tell this that it's profitable at both PAT and EBITDA level. Is that a fair assessment?

[Ameya Deshpande, executive]

It's a carve-out. So there is no concept of PAT over here. But yes, it is profitable at EBITDA level.

[Operator]

As there are no further questions, I would now like to hand the conference over to the management for closing comments.

[Amit Dahanukar, executive]

Thank you all for joining today's call and for your continued interest in our progress. As we look ahead, we are incredibly excited about the opportunities that lie for us in the coming quarters and years. While we fully recognize that the path ahead will present challenges, we are confident that we've identified the critical areas, both short term and long term that will drive our success. We're equally excited to have you with us on this journey as we work to establish ourselves as one of India's leading pan-India IMFL players, spanning multiple categories and premium price points. Thank you once again for your time and support. We look forward to reconnecting with you soon.

[Operator]

Thank you very much. On behalf of CDR India, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.