Allied Blenders and Distillers Ltd (NSE: ABDL) Q3 2026 Earnings Call dated Jan. 30, 2026
Corporate Participants:
Jayathirtha Mukund — Head of Investor Relations and Chief Risk Officer
Alok Gupta — Managing Director
Analysts:
Abhijeet Kundu — Analyst
Nitin Gupta — Analyst
Abneesh Roy — Analyst
Mehul Desai — Analyst
Kaustubh Pawaskar — Analyst
Aliasgar Shakir — Analyst
Sanjay Manyal — Analyst
Dhiraj Mistry — Analyst
Karan Kamdar — Analyst
Tanmay Gupta — Analyst
Vaibhav Gupta — Analyst
Chetan Mahadik — Analyst
Avnish Tiwari — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Allied Blenders and Distillers Q3 and 9M FY ’26 Post Earnings Conference Call hosted by Antique Stock Broking. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Abhijeet Kundu. Thank you, and over to you, Mr. Kundu.
Abhijeet Kundu — Analyst
Yeah. Hi. Thanks. It’s our absolute pleasure to host the management of Allied Blenders and Distillers Limited for the third quarter of ’26.
Over to Mr. Mukund, Head of Investor Relations and Chief Risk Officer, for further proceedings. Thank you.
Jayathirtha Mukund — Head of Investor Relations and Chief Risk Officer
Thank you, Abhijeet. Good evening, everyone, and thank you for joining our Q3 FY ’26 results conference call. I hope you have received a copy of our results presentation. I would like to urge you to go through this along with the disclaimer slides.
Today, we have with us from the management of ABD, Mr. Shekhar Ramamurthy, Executive Deputy Chairman; Mr. Alok Gupta, Managing Director; Mr. Jayantt Manmadkar, Chief Financial Officer.
I would like to hand over the call to our MD, Alok Gupta, who will give the summary of the company’s quarterly performance before we open up for Q&A. Over to you, Alok.
Alok Gupta — Managing Director
Thank you, Mukund. Good evening, ladies and gentlemen. Thank you all for joining us today for the Q3 and the nine-month FY ’26 earnings call of Allied Blenders and Distillers, and also take this opportunity to wish each one of you the very best for the year ahead.
I’m pleased to share that this quarter marks our sixth consecutive quarter of strong performance post listing, with consistent improvement in the premiumization of our portfolio, margins and cash flows. The sustained performance over the last several quarters underscores the effectiveness of our strategy, which remains firmly centered around driving profitable growth, strengthening our premium portfolio and investing in backward integration to enhance margin and ensure supply chain security.
During Q3 FY ’26, our consolidated income from operations stood at INR1,004 crores, representing a 2.8% increase over Q3 FY ’25. EBITDA for the quarter was INR137 crores, reflecting a 14.1% year-on-year growth, with an EBITDA margin improvement to 13.6%. This improvement was driven by better product mix, operating leverage and benefits from backward integration, while we continue to invest behind our brand and building our luxury portfolio.
On the profitability front, PAT grew by 10.9% year-on-year to INR64 crores during the quarter. For the nine-month period, our consolidated income operations stood at INR2,929 crores, representing a 12.4% increase over nine months FY ’25. EBITDA for the period was INR386 crores, reflecting a 28.1% year-on-year growth, with EBITDA margin improving to 30.2% and PAT at INR182 crores, reflecting a 57% year-on-year growth.
Our nine-month performance is a performance reflection of strong fundamentals, steady revenue growth, improving margins and strong operating cash flow generation, reinforcing the scalability of our business model and structural benefits of premiumization.
In terms of volume, we sold 9 million cases in quarter three FY ’26, marking 1.3% year-on-year increase, supported by a 0.7% improvement in realization per case, driven by an improved product mix and selective price increases.
At the industry level, the mass premium whiskey segment softness during Q3 FY ’26. As already discussed over Q2 FY ’26 earnings call, stocking norms in Telangana were impacted due to the retail license auction process, which led to temporary moderation in the trade inventory levels. We are expecting normalization during Q3 FY ’26 itself and normalization is also visible in January 2026. In Maharashtra, policy-driven price changes affected consumer affordability and buying behavior, resulting in a lower consumer offtake. Together, these region-specific factors contribute to subdued demand condition across the industry for the quarter.
Within our portfolio, Officer’s Choice continues to play a pivotal role in the business. The brand maintains its leadership position in the mass premium segment in India and remains country’s top exported whiskey brand. Despite category level headwinds, Officer’s Choice gained incremental market share during nine months FY ’26 and also in Q3 FY ’26, reflecting sustained brand strength and distribution reach. Importantly, the brand continues to deliver improving gross margins now at about 45%, making it a critical driver of profitability and cash flow in the company. Our P&A portfolio continued to demonstrate strong momentum. Volume grew 16.9% on a year-on-year basis, resulting in a meaningful improvement in the salience of P&A segment to 48.5% in Q3 FY ’26 compared to 42% in Q3 FY ’25. This sharp improvement reflects the continued success of our premiumization strategy and our focus on building scale with value.
ICONiQ White continues to be standout performer and remains one of the strongest pillars of our premiumization journey. ICONiQ White has also emerged as a brand of choice for the new consumer coming to the legal drinking age, further strengthening its long-term growth potential. The brand continues to expand its presence both domestically and internationally, reinforcing its role as a key growth engine within our P&A portfolio. For the nine-month period, it has delivered 7.7 million cases compared to 5.7 million cases delivered in the entire previous financial FY ’25. It is well on progress to touch 10 million cases mark in this financial year.
Coming to our next millennial brand, Sterling Reserve B7. In Q2 FY ’26, we introduced a refreshed blend with enhanced smoothness and taste supported by a nationwide campaign, So Smooth, Must Be Magic and a differentiated digital collaboration with cricketer Shreyas Iyer. This initiative will help strengthen consumer engagement and drove traction across select priority markets. This underscores our continued focus on product improvement and consumer-centric brand building. Building on this momentum, we are progressing towards the launch of a contemporary packaging by Q1 FY ’27 aimed at appealing to the new age consumer and supporting further market share expansion.
Officer’s Choice Blue, one of our million brand in the Prestige segment continues to be a strong regional power brand, supported by the equity and recall of Officer’s Choice franchise. Currently, our focus on refreshing the brand through our international style packaging is well on track, and we expect it to roll out in Q1 FY ’27.
Update on the CSD market. CSD is one of the most profitable sales channel for the industry with the annual volume of 10 million to 12 million cases and is strategically important. We are pleased to share that 4 new brand of ours have now been approved within the CSD market, Jolly Roger rum, Sterling Reserve B7, Kyron and ICONiQ. Some of these brands we’ve also started building. This approval in CSD will become yet another growth track for our brand, especially for SRB7 and ICONiQ Whiskey.
ABD Maestro made strong progress during the quarter. We launched three new brands, Rangeela Vodka, YELLO Designer Whisky, and AODH which is pronounced as A, Irish Whiskey, further strengthening our premium and luxury offering. These launches are aligned with ABD Maestro’s focus on building differentiated design-led brands anchored in quality and craftsmanship and position us well to participate in the fast-evolving premium consumption landscape.
Now we have built nine brand portfolio, with unique flavor price point through a build, buy and partner model. Alongside new brand, ABD Maestro continued to expand its presence across key consumption channels. During the quarter, we introduced our premium portfolio at Mumbai International Airport, adding to the existing duty-free presence at Delhi and Bangalore Airport and enhancing brand visibility among international travelers and premium consumer.
Our international expansion strategy continues to deliver strong results. Over the last 21 months, ABD has expanded its footprint from 14 countries to 31 countries, highlighting the effectiveness of our asset-light, high-margin export model. This model delivers high profitability than the domestic business and operates with significantly lower working capital per case.
ICONiQ White now is present in nine countries. ABD Maestro’s brand, Zoya and Arthaus is now available in three countries in UAE, Ivory Coast and New Zealand. By Q4 FY ’26, we are targeting to expand our international presence to 35 countries.
Moving to our backward integration progress. Backward integration program, as you all know, has been designed in terms of being EBITDA accretive, and it continues to be executed in a phased manner and a discipline where the focus is on cost of build, time to build and delivering the margin and is aligned with our long-term objective of growth, margin expansion and balance sheet strengthening.
Phase 1, outlined in previous quarters, we had announced INR525 crores of investment program, including a PET bottling manufacturing facility, which is fully commissioned and is running to capacity and adding to the margin. Our two other projects of Malt distillery in Telangana and ENA distillery in Maharashtra are on track. Together, these strategic initiatives are expected to enhance our gross margin by 300 basis points by FY ’28 quarter four.
In the Phase 2 comprises of incremental growth capex announced in January ’26, focused on expanding own capacity across critical nodes of the value chain. These include an investment of approximately INR110 crores in Uttar Pradesh, which is a large market for us. The investment includes around INR40 crores towards upgradation and commissioning of a fully automated bottling facility, enabling meaningful own versus outsourcing arbitrage with the optionality of future ENA distillation expansion on the site. This bottling unit is expected to be operational by Q3 FY ’27 and will also save us the franchise fee of INR27 per case, which is currently payable.
In addition, the company has approved a further investment of approximately INR54 crores in our subsidiary, Minakshi, which is in Maharashtra, towards expansion of bottling capacity at our Aurangabad facility. This investment will support growing demand in the Western region and international market while improving the operational efficiency, optimizing logistics costs and enhancing margin through high utilization of owned bottling infrastructure.
The expanded facility is expected to be operational by FY — Q4 of FY ’27 and will again add to our EBITDA margins. Overall, our capex strategy remains centered on disciplined capital deployment, deeper backward integration and building scalable margin-accretive capacity while maintaining balance sheet prudence. Our performance continues to reflect strong operating cash flow generation, supported by robust profitability and disciplined working capital management.
During Q3 FY ’26, we generated operating cash flow of INR173 crores. Our net debt position stood at INR785 crores as on 31st December ’25 compared to INR893 crores as on 30th September ’25. And this reduction in the net debt is during our capex phase and continued investment in our luxury portfolio with leverage metrics remaining well within our stated framework.
During Q3 FY ’26, some of the long pending overdues were cleared in the Telangana market for the industry participating, including ABD. The overall industry outlook remains cautiously optimistic with respect to progressive clearance of remaining dues in addition to collection of regular debt.
Looking ahead, the Indian alcohol industry continues to witness growth driven by premiumization, portfolio expansion and evolving consumer preference. The P&A segment remains a key growth driver, supported by innovation and improving route-to-market framework. Regulatory reforms in select states have been supported — have supported volume recovery with a stable raw material environment that continues to aid margin stability.
While state-level regulatory changes and emergence of local brands in certain markets such as Maharashtra remains area to monitor, we remain confident in our ability to navigate this dynamic through a portfolio strengthening, execution discipline and deep market understanding. Overall, we expect strong pipeline — strong top line growth in quarter four, underpinned by our focus on consumer-centric growth. As we move forward, our focus remains on improving unit economics, driving value-added volume growth, keeping our portfolio consumer-centric and deploying capital with discipline.
With a strong brand portfolio, expanding international presence and robust manufacturing backbone, ABD is well poised to play a leading role in India’s growing premium consumption market and continue delivering long-term value to all our stakeholders.
Thank you once again for your continued interest and support. We will now open the floor for questions.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from the line of Nitin with Emkay. Please go ahead.
Nitin Gupta
Yeah, thanks for the opportunity. My first question pertains to Telangana market. Could you shed some light on what really affected our volume in Telangana market in terms of the route-to-market changes? And it would be great like if you can highlight what is the split of P&A and mass premium in Telangana market? And lastly, in Telangana, as the restocking is progressing, so can we expect equally good quarter Q4 compared to the weaker quarter in Q3? So that’s the first question.
Alok Gupta
Thank you, Nitin. As far as Telangana is concerned, it’s been an interesting quarter three. Therefore, in quarter three, what really happened was that the P&A segment actually grew by 17%. ABD portfolio also grew at 17.5%, so marginally ahead of the market. It was a mass premium segment that degrew at about 7.4%, and we also degrew about 7%. Overall, the industry grew at about 9%.
So, what really happened was that the licenses came back for rebid. And the rule is that whatever stock is held by a current licensee needs to be sold off, because the government does not take back the stock. And essentially, therefore, the buying by the current licenses come down dramatically. They stop buying because they have to finish all the stocks that they are holding. And it’s only when the new licenses come into place, they start buying. This creates a disruption of about six to eight weeks. That is what we saw in Q3. Keeping in mind that they also look at rotation of stock, the margin that they make.
Typically, P&A continues to get support, but the stocking gets decelerated on mass premium. That’s why it reflects a continuous growth on the P&A segment and a degrowth of 7% in the mass premium segment. In January, we are expecting from January, we are already seeing that the stocking patterns are getting back to normal. So Q4, hopefully, will be on track as things said. Your second question was on what is our outlook on Q4. Is that right?
Nitin Gupta
Yes, yeah.
Alok Gupta
Yes. So, I think just one quick number that if you were to look at our growth without Telangana and Maharashtra, you would find that we’ve actually grown significantly faster. Now that in Q3, the environment seems reasonably settled in Telangana and seemingly reasonably settled in Maharashtra, we are back on our growth track. So, like we said earlier, we are targeting a double-digit growth in Q4.
Nitin Gupta
Thank you. And with respect to this mass premium sort of seeing a decline, so this is like given we are the sort of having a largest share in this market. So that’s where this impact is visible for us unlike the competition. Would that be a fair assessment?
Alok Gupta
So in Telangana, specifically, the mass premium segment comprises of where we operate. We are virtually 100% of the market, but there is also a growing price point below the Officer’s Choice price point. So, the 7% degrowth that you are seeing in the segment is on both the — our price point, which is about INR160 and INR130 price point.
Nitin Gupta
Okay, thanks. Second question pertains to this Minakshi Agro like where we are looking to go for INR54 crores of capex. So, like this is an additional capex we announced for the bottling unit. Like I just wanted to know your thoughts around like when we initially wanted to have the distillation capacity, why we have not budget for this? And is this also related to like another question I have in terms of the MML participation, Maharashtra Made Liquor participation. So, is it somewhere related to that? Can you clarify on that?
Alok Gupta
Most certainly. So currently, given the size of business in Maharashtra and the fact that we also export ex Maharashtra across the globe, we are currently getting our brands bottled across four different units for which ENA has to be moved, let’s say, through tankers to all the units. So, the immediate efficiency that we see coming on back of having bottling at the same premises where ENA distillation is happening is that you will — we will move ENA through pipe. So, it’s extremely value accretive in cutting down the transportation cost, one and secondly, cutting down the working capital because currently, we are stocking ENA at 4 different locations. There is ENA, which is in transit. Here, everything is on a pipeline. So therefore, it is clearly — there’s a clear business case merit that the bottling should coexist with the ENA facility. The reason why we have announced now is because as you are aware that we need to get approvals. Only once we got approvals in our hand, have we announced this facility in January. So that answers one.
As far as MML is concerned, I’m sure all of you are aware that there has been a recent development where High Court has advised that all manufacturers should go ahead and file their applications, if they want to participate in MML. Minakshi has indeed filed its application as they qualify for MML. And if MML application of ours is approved, then this bottling facility will also come in handy to serve the MML market. But stand-alone, there is a significant merit for us to have the bottling plant within the ENA premises.
Nitin Gupta
Really helpful updates. And lastly, around this realization. So, we have seen sort of a decline in realization for both P&A and mass premium. So, does this pertain to state mix? Or is there anything to read through?
Alok Gupta
Just state mix, nothing else.
Nitin Gupta
Sure, got it. Thanks a lot and all the very best.
Alok Gupta
Thank you very much.
Operator
Thank you. Next question comes from the line of Abneesh Roy with Nuvama. Please go ahead.
Abneesh Roy
Yeah, thanks. My first question is on the FTA. So, first is, what will be your take on UK FTA delay given UK Parliament is yet to approve? Do you think that Q2 is the realistic date or H2?
Second related question is the EU deal mother of all deals has been signed, that does suggest gradual reduction in terms of imported spirits from EU. Would you see this as a non-event? Or would you see this as a mild positive or a mild negative?
Alok Gupta
So as far as the India UK FTA is concerned, the feedback that we have is that Q2 looks like the period in which the FTA should come into place. So, for now, we are holding on to the Q2 guidance as far as the India UK FTA is concerned. I think the world order has changed significantly, and we are hopeful that, that will also act as a reason to accelerate the FTA implementation.
As far as the India EU FTA is concerned, I think from an India business perspective, it’s not a relevant event because what we import from EU is largely vodkas, we import liquors and branding. It’s a very small part of the alcobev consumption in India. I feel that what could be a very interesting opportunity is for us to participate in the EU market. We, for example, are considering setting up a hub in Europe, right, to be able to feed multiple countries within EU.
So, our view is that this could be a very interesting opportunity for our luxury portfolio, our mainstream portfolio. We are already shipping to Spain and Italy. So, we have started our business in Europe. And as our single malt comes on stream in 2029, this route could become very, very effective in terms of driving growth. So, I would say that, interesting opportunity on outbound trade and very to negligible impact on inbound trade.
Abneesh Roy
Sure. Your comment that Q4, you are targeting a double-digit sales growth because kind of stability is coming in both the key states where there was an issue in Q3. Specific question is Maharashtra, what will be the additional impact of Maharashtra made because Q4 will see all 3 months see that impact. So, given that, is it a bit early to say that stability is coming in Maharashtra?
Alok Gupta
So, when I mentioned stability, what I meant was that we believe that significant consumer movement has happened in terms of those who are opting for MML and those who are staying with IMFL. So, it’s easy for us to model as to what volumes we can get out of Maharashtra. And therefore, when we are talking about our guidance for Q4, we’ve already factored sort of the — what sort of volumes will come in Maharashtra. That’s the point I was trying to by stability, it’s not that the market is back on track. We are saying now we know what the stable state of market is going to look like.
Abneesh Roy
No, I could not fully get it. Simple question is, in Q3, Maharashtra industry has seen a double-digit volume decline. In Q4, also, it will be a decline. So how will it not impact your numbers in that case?
Alok Gupta
So, when you’re saying Q4, there will be further decline, that will be on back of what?
Abneesh Roy
No, on a Y-o-Y still, there will be a decline in Q4 versus last year Q4.
Alok Gupta
I’ve understood your question now. So, I think the way we are saying we have the Q3 numbers, right? So, it’s not about what happened in Q4 last year. We have the Q3 numbers for FY ’26. And therefore, we’ve modeled saying what is the likely size of the industry in Q4 FY ’26 in Maharashtra. And where we are talking about overall growth to be double digit, we have factored that Maharashtra will continue to operate at significantly lower level. So, the comparison is not with the degrowth that we will see in Q4 FY ’26 versus Q4 FY ’25. We have actually modeled this in saying that, the market is down, as you’re rightly saying, by high double digits.
Abneesh Roy
So that does mean that Telangana and rest of India ex of Maharashtra should compensate for the, say, double-digit decline in Maharashtra even in Q4. Only then it’s possible, right?
Alok Gupta
That is right. That is correct.
Abneesh Roy
Understood. That’s all from my side. Thanks a lot.
Alok Gupta
All right. Thank you.
Operator
Thank you. Next question comes from the line of Mehul Girish Desai with JM Financial. Please go ahead.
Mehul Desai
Hi, sir. Good evening. Thanks for the opportunity. Firstly, obviously, you gave a guidance of double-digit growth in 4Q, which looks like if we maintain our mid-teens kind of sales growth in P&A, maybe, let’s say, 16%, 17%, it looks like the mass premium segment, your assumption should be at least low single-digit decline or flattish on a Y-o-Y basis. So just wanted to get your understanding. Is that understanding correct? And obviously, 4Q double digit, but how do you look FY ’27? I mean, you will be lapping up a high base now. So how does — what is your guidance for FY ’27, both on P&A side and mass premium segment? If you can give some color on that? That’s my first question.
Alok Gupta
Right. I think there is one more factor to consider when we are talking about our value growth is that the ABDM portfolio is now complete. We have nine beautiful brands out there. We are already seeing about a 40% width of distribution in the premium on-premise. We’ve been able to open up the duty-free. We have started to ship in international market.
If you recall, one of the — we had said that we are running currently at about a INR40 crore ARR in quarter three, which we should double in quarter four and go on to double the next year. So, another significant driver of our value growth is going to be the revenue that will flow to us from our luxury portfolio. So that will be on top of our mainstream legacy portfolio. So that’s an important part of how we see our value growth engine getting shaped up.
As far as FY ’27 is concerned, there are two or three things that we are planning. One I’ve already covered, which is the ABDM accelerated growth. So, we should — we are looking at doubling our ARR in the next financial year.
Secondly, we are looking at two new launches — one new launch, one already existing launch in the P&A non-whiskey segment, which is really the Prestige Vodka and the Prestige Brandy, and we are hopeful of garnering profitable shares from these two flavors, which is brandy and vodka put together, there are about 30 million cases.
Also in the Southern market, we’ve been able to get some approvals for long pending new brand introduction there, and that will allow us to participate in high-volume profitable segment. So, in Q4, we are expecting these two approvals to fall in place that will also create a growth pipeline for us in the next financial year.
Mehul Desai
Understood. Secondly, on the margin front, obviously, your gross margin progression is much faster than what your guidance is of 45% plus in FY ’28. You are already at 46-odd percent. And there are a few more backward integration projects that are going to come in FY ’27 and obviously something in FY ’28 too. To that extent, how do you see this gross margin trajectory also in FY ’27? And would you think that your 15% margin guidance of FY ’28 can come in FY ’27 itself?
Alok Gupta
So, the FY ’28 margin guidance, we had revised last quarter. We had taken the margin guidance to 18%, largely on back of the fact that we are seeing a faster gross margin progress on our current portfolio. The capex program will add 300 basis points, of which right now in quarter three, we have captured just about 0.7%. So, there’s another 230 basis points to flow in from our capex project. And of course, let’s assume that quarter two, the India UK FTA is up and running, that will add another 200 basis points. So, we are expecting that by FY ’28, we should be at least at an 18% margin guidance.
Mehul Desai
Understood. Okay. That’s helpful. And lastly, sir, if you could quantify the capex for FY ’27, overall capex with all the projects that you are undertaking in FY ’27 and FY ’28?
Alok Gupta
So, the capex that we had announced till quarter three FY ’27 is about INR575 crores. The two new capex program that we have announced gets us to about another INR150 crores of capex. So that is about INR700 crores of capex that we have announced so far. Of course, we’ll keep looking for opportunities that come our way.
Again, from a guidance perspective, we have said that we would want to get ENA capacity equal to our consumption. We would have needed three units, ENA units. So, one we have in Telangana. Second, we are doing in Maharashtra, and we will need one more ENA unit in a large market like UP or in Andhra. So, we are figuring that out. So that is the capex that we’ll announce in the future. But as of now, the total capex commitment is just over INR700 crores.
Mehul Desai
That’s helpful. Thank you.
Alok Gupta
Thank you.
Operator
Thank you. Next question comes from the line of Kaustubh Pawaskar with ICICI Direct. Please go ahead.
Kaustubh Pawaskar
Yeah. Good evening, sir. Thanks for the opportunity and congrats for good margin performance. Sir, just a clarification on the margin guidance. You just mentioned that 230 bps is going to flow through the capex project. So, does it include this Phase 2 of the capex which you are planning to do or that will be the incremental over what the capex you are planning to do in Phase 1?
Alok Gupta
This is from Phase 1. The first phase of the investment, which was roughly INR550 crores, 300 basis points also come from that 0.7 we’ve realized, which is our PET project. So, the balance 230 basis points will come from the first phase. The second phase will become value accretive in H2 of next financial year.
Kaustubh Pawaskar
Okay. So there is a scope of further margin expansion because of the second phase of?
Alok Gupta
That is correct. That is correct. I mean in UP alone, for example, once the walking unit is up and running, we did not pay the INR27 franchise fee on a base of about 6 million cases. That in itself is — that itself is better realization in UP.
Kaustubh Pawaskar
Right. And sir, my second question is on the funding of the capex. So, all the capex what you are planning to do, like including the INR150 crores, the additional capex what you are planning to do, it will be largely funded through internal accruals. So, since your cash flows are improving, you are also expecting the Telangana overdue to flow in, in the coming quarters. So that should help to have create a good cash flow to fund all this capex.
Alok Gupta
So, first of all, all our investment decisions will be guided by the financial KPIs that we already committed to in terms of net debt to equity and other key financial ratios. So, we’ll make sure that all our decisions respect those guidelines. I think we are working with two scenarios. One scenario is, as you have mentioned, is Telangana payment coming through.
And second scenario is that, if Telangana payments were still slow to come by. Because these capex programs have a merit on a stand-alone basis, we don’t want to link the implementation of the capex program to Telangana receivables. Therefore, if Telangana money was to come through, we will see incremental change in our net debt. But even if Telangana payment does not come through to the level expected, we’ll still go out with our capex program because like I said, this two new capex program will become value accretive within six months. So, there is no point in delaying this capex program.
Kaustubh Pawaskar
Sure. And sir, my last question is on having a bottling unit in Uttar Pradesh. How will it help you to expand your share in the UP market? As we know that UP is one of the largest market? And how will it help us maybe to expand our share in that particular market?
Alok Gupta
Well, there are two aspects of the UP investment. One, of course, is the saving on the franchise fee of INR27 a case as it exists today and therefore, becomes margin accretive from day one.
Secondly, UP is a very large state. Therefore, in addition to our own 6 million capacity, we are also exploring maintaining something — maintaining a second unit for manufacturing because there are significant savings in terms of logistics when we look at inbound costs and outbound costs. So, I think we should be looking at running more than one bottling unit. But the key driver for this unit is really the franchise fee, which is INR27 a case.
Kaustubh Pawaskar
Okay, thank you sir. Thanks for that.
Operator
Thank you. Next question comes from the line of Aliasgar Shakir with Motilal Oswal Mutual Fund. Please go ahead.
Aliasgar Shakir
Yeah, hi, sir. Thanks a lot for the opportunity. A couple of questions, sir. First question is on the volumes. So, this year, our P&A has done very well, thanks to the success of ICONiQ. Now you did discuss about the scope opportunity of ABD Maestro and also some of the other brands that you are trying to rejuvenate. So just wondering, I mean, next year, what is the thought in terms of growth? How much of this P&A growth you are expecting ICONiQ to continue and the new brands to contribute because right now, P&A is largely driven by the ICONiQ growth. That’s question number one.
Question number two is now you have improved — increased your margin guidance to 18% thanks to the backward integration measures. But a quick question over here is that should we build also some impact coming from two areas. Point number one is the new brand that you will be launching or rather you have launched in ABD Maestro and others, what is the investment that will go towards them in the initial period when the scale will be suboptimal? And also, the projects that we are doing on backward integration will probably take some time to achieve scale until then they may probably operate at suboptimal level and therefore, could be margin dilutive. So, is that — are these two impacts already built in your margin when you are building the 18%? And how much is it from these two?
Alok Gupta
Right. So let me take the capex question first. I think if you should look — I mean, I’m just taking an example. I think at the heart of our capex strategy are three simple principles. One is cost of build. Second is time to build and third is targeted margin. So therefore, if you take UP as an example, we have announced the acquisition a few days back. We are targeting the asset to turn around in the next six to nine months. So, we know the cost to build. We know the time to build. And essentially, we are putting a 6 million case fully automated, state-of-the-art automated plant.
Our current volumes are enough to support the entire capacity utilization. So, I think we are quite conscious that when we are putting capex behind any program, we are quite conscious that our capacity utilization must be at a targeted level only then we will be able to realize the rupee crore EBITDA that we have put into our modeling. So that’s one thing I can assure you that we will not invest in capex where it will take us inordinate amount of time from a capacity utilization.
So even if you look at the single malt distillery we are setting up in Telangana, roughly 55% of our volume will go in replacing our current malt that we are buying from third-party and the balance will go into maturation for our own single malt. So capacity utilization is going to be the key. Time to build and cost of build is going to be our important drivers of the way our capex decision are being done. So, when we are giving a margin guidance, all this has been baked into our model.
On the growth front, I think I would say that, we have to, and point I made even earlier that I think when we are talking about premiumization in the Indian subcontinent, we have to start focusing on value growth because volume growth may not be a correct indication of what’s happening with the consumer. So, we are talking about a mid-double-digit value growth. A, it will come on back of what we are doing with ABD Maestro because quarter-on-quarter, we are looking at accelerated run rates, about INR40 crores last quarter, hopefully, INR80 crores plus this quarter, so doubling. And we should exit, again, double this run rate in next year. And therefore, it really brings in a significant top line growth.
We are looking at two new brands in the P&A brandy and vodka segment. And in the mass premium segment, as you know, in Andhra Pradesh specifically, there is this big profitable brandy price point, which has now gone on to become roughly 12 million cases in which we did not have a presence till last quarter. And we’ve been able to get our in-principle clearance, and we are hopeful in this quarter, we’ll start participating in this 12 million case market in which we didn’t exist till last quarter.
So even at a reasonable market share, of x percentage, we should be able to get a very, very large volume, I mean, another million — million brand in making. So, I think the volume growth focus will continue both in the mass premium segment, wherever there’s a profitable price point available — profitable flavor available. We are largely a whiskey company. However, this particular opportunity in Andhra, for example, is a brandy. So, we are expanding our flavor repertoire in mass premium. Earlier, we were only whiskey only. Now we’ll do brandy as well. And therefore, the volume growth will come from mass premium, it will come from P&A, and it will come through new brands. And the value growth will come on back of both volume growth in our core IMFL portfolio, but also growth in the ABDM portfolio. Sorry, slightly long response, but I hope it clarifies the subject on growth.
Aliasgar Shakir
Yeah. This is very, very useful and very insightful. Only point if you can just also clarify on the impact of these new brand launches, will that be margin dilutive in the first year? And is that also built into your margin expectations?
Alok Gupta
The investment that we need to make in our luxury portfolio is already built in, in the margin guidance of 17% to 18% accounts for this investment.
Aliasgar Shakir
Okay. It’s 18%, right? Or it’s a range of 17% to 18%?
Alok Gupta
17% to 18%, you can pick a number.
Aliasgar Shakir
Okay. Got it. Another question quickly on your impact from Maharashtra and Telangana. So Telangana, given that now the route to market will be stabilized, all that you have lost, I know you said that you will do double-digit growth, aim for double-digit growth in Q4. But all that you have lost in the revenue for Q4 — Q3, should be recovered more or less in Q4? I mean you should be the steady-state volume numbers in Q4? Or should there be any more impact prolonging even in Q4? And what about Maharashtra? Maharashtra should take longer, right?
Alok Gupta
So, Telangana, I think we believe that Q4 is back to normal for us. Maharashtra, like I was trying to explain earlier that we have taken Q3 exit base as a likely market size in Q4. So — so that’s our assumption that the Q4 market size would be similar to Q3, and we have done our modeling — growth modeling on that phase. We are hopeful that it will not materially alter.
Aliasgar Shakir
And how has the trend been post Q3 in Maharashtra? Has it further deteriorated or it has improved or just.
Alok Gupta
January numbers are yet to come in. I think we’ll get to know by mid-February once the industry data comes in, whether our assumption is holding good or not. But so far from what we are seeing, it seems to be okay.
Aliasgar Shakir
Got it. Very useful. Thank you so much for asking all the questions.
Operator
Thank you. Next question comes from the line of Sanjay Manyal with DAM Capital. Please go ahead.
Sanjay Manyal
Hello sir. I have a few questions. Firstly, on the ICONiQ White, you have seen a brilliant growth in the last few years in the brand. I believe a decent growth would have been coming from gaining the shares from our competing brand, Imperial Blue. Now have you seen any renewed competition specifically from this brand given that change of brand owner over there?
Alok Gupta
I think we were — we are and we were and we are mentally prepared that with the new owner having acquired Imperial Blue, they would do whatever it takes. So, we have proactively strengthened our sort of program in the market, be it in terms of trade engagement, consumer engagement, be it in terms of what we do at BTL level. So, I think we are reasonably well prepared to ensure that the growth trajectory of ICONiQ is not compromised. So, what is in our control is what we do. What is not in our control is what the competition does. So we have proactively taken all required steps.
I’m also happy to share with you is that ICONiQ is now sort of running at 1 million case a month, which gets us to a 12 million case ARR any which way. Also, I spoke about earlier that we have received approval for ICONiQ in CSD. That opens up another growth opportunity for us. We are not present there. And ICONiQ is now getting shipped into nine countries internationally. We are looking at aggressively expanding the footprint of ICONiQ.
So apart from the growth in the market where it’s already operating, CSD will become a very important channel for us. International markets will become a very important channel for us. And the brand in any case is currently running at a 12 million case ARR. And that’s how we are sort of prepared to ensure that the growth momentum on ICONiQ is maintained.
Sanjay Manyal
Sure. And one on the ABD Maestro, if you can highlight any success of late or which brand seems to be breakeven first or reaching a sort of a benchmark volume number, if you can highlight that?
Alok Gupta
Most certainly, I think January ’24 is when we started our journey in the luxury — buildup of the luxury portfolio. Zoya was our first brand launched in January ’24. Extremely happy to share with you that the brand has grown almost 300% since its launch. More importantly, we’ve spoken about right to win from a consumer point of view. We have launched two new flavors, which is the Zoya Watermelon and the Zoya Espresso Martini gin.
Now I’ll tell you why I’m talking about these two flavors. Our thesis was that post-COVID, a lot of consumption has moved in home, but making cocktails is not easy. And the idea was to bring flavors that allow consumer to enjoy cocktail in the comfort of their home. So, Espresso Martini is one of the largest selling cocktails in the bar. With our Espresso Martini gin, all you have to do is to buy a shaker, you can buy Amazon, ice is available, just shake it up and pour in a glass of your choice and your espresso Martini is ready. And same is the case with the Watermelon gin that you can just put ice in the shaker and pour in a glass of your choice and you want to add a strawberry, just get it up Instamart.
So, I think what really is happening with Zoya is that it is just making it convenient for a consumer to enjoy the cocktails. And the interesting data point is that today, 30% of Zoya sale comes from flavor. But more importantly, 95% of the sales happens off-premise, which is an indication that consumers are actually picking it up, taking it home and actually enjoying these flavors. So, I think this is one success story, and we’ll build on the success story for all our brands.
The portfolio has got nine brands now in which we have a scotch malt, scotch blended malt. We have an Irish whiskey. We’ve got two beautiful Indian whiskeys. We’ve got two vodkas, Rangeela, which is sort of the bold face of India and Russian Standard, which is a global brand. So, the portfolio buildup is complete. But I can walk you through more case studies, but Zoya is the most interesting one because you are a whiskey forward company for us getting a success in gin flavor is very enjoyable.
Sanjay Manyal
Right, sir. And lastly, if you can mention one thing that what would be your ENA requirement as of now? And by, say, at the end of FY ’27, once your distillery new distillery comes on stream, what percentage of ENA would you be sourcing indigenously?
Alok Gupta
Yeah. So, I think the way to look at is that what is our forward requirement. So, let’s say, even at 50 million cases, our requirement is 200 million liters of ENA. We produce currently about 70 million liters in-house, which is 60 million liters in Rangapur and about 10 million in Maharashtra. With the expansion of the Minakshi distillery, we’ll take the number add another 50 million. So, by FY ’27, we should be about 120 million, and that is why we need to invest in more plant of about 60 million to 70 million liters to get us to about 200 — so we are targeting 200 million liters, of which we are currently at 70 million. We’ll be at about 120 million by FY ’27 and balance by end of FY ’28.
Sanjay Manyal
Perfect. Thank you. Thank you very much for all the answers.
Operator
Thank you. Next question comes from the line of Dhiraj Mistry with ICICI Securities. Please go ahead.
Dhiraj Mistry
Hi, Alok.
Alok Gupta
Hi.
Dhiraj Mistry
Congratulations on your margin surprise. Sir, I have only two questions. One is, if I look at ex of ICONiQ White, how is the traction, especially in the premium end of the portfolio, let’s say, Sterling Reserve B7, B10 and Officer’s Choice Blue?
Alok Gupta
Sorry, Dhiraj, I didn’t get your question. Can you please repeat it for me?
Dhiraj Mistry
So, I want — can you comment the growth trajectory for non-ICONiQ part of the portfolio, that is Sterling Reserve B7, B10 and Officer’s Choice Blue. How is the volume growth traction in those brands?
Alok Gupta
Dhiraj, as far as our approach has been slightly different. If you look at the 410 million case industry, roughly 120 million case is what we call as prestige whiskey, which is really the price point of McDowell’s No. 1 Royal Challenge, Royal Stag and Imperial Blue. So, our approach has been that how do we meaningfully profitably carve out market share. So currently, we are at about 15% market share on back Officer’s Choice Blue, ICONiQ and SRB7. And idea is to keep looking at getting market share at an aggregate level.
So that’s the response in terms of what the approach is. In terms of growth, ICONiQ, of course, is continuing to grow. OC Blue and ICONiQ operate at the same price point. So, we look at OC Blue being a regional brand in core pockets of strength, and we look at numbers together. SRB7 is where our task is cut out. Currently, we are experiencing a bit of degrowth on the brand. We have put together a program on the new blend, which has given us success. We are also looking at now launching a new pack in Q1 of the next financial year. And I think with that, targeting growth — targeting to bring back growth back in SRB7.
Dhiraj Mistry
Got it. Got it. And sir, some follow-up question on this part. Is my assertion right that B7 would be much more gross margin accretive compared to ICONiQ White?
Alok Gupta
Even as a percentage, is that your question?
Dhiraj Mistry
Yes. Yes.
Alok Gupta
B7, I think it will be in the same range. Maybe ICONiQ is 150, 200 basis points behind SRB7, but it will be the same range.
Dhiraj Mistry
Got it. Got it. And second question is on what would be the — which would be the 5 key states for Ionic wide? And when I compare it with, let’s say, Officer’s Choice, how are — which are the 5 top states for Officer’s Choice also?
Alok Gupta
So, the top five states for ICONiQ would be UP, where the brand is clocking close to 2 million cases. The big state is Telangana, the big state is Andhra, the big state is yes, these are the three — because these states to — they’re all crossing of course, Haryana. So, I think Haryana, UP North, Telangana, Andhra in South are the four big markets for ICONiQ. Telangana, UP are the two top markets for Officer’s Choice is the way the stack would be. So, Telangana and UP are common to both the brands.
Dhiraj Mistry
That’s it from my side. Thank you.
Operator
Thank you. Next question comes from the line of Karan Kamdar with Choice Institutional Equities. Please go ahead.
Karan Kamdar
Hello sir. Great set of numbers. I wanted to understand how do you view your playbook for distribution, given that we are growing at a very fast pace, I’m sure the competition is also doing something. So, what are we doing differently from the competition?
Alok Gupta
I think I’ll broadly divide this into two parts. The first is our portfolio with ABD, which is operating at a price point of, let’s say, INR1,500, where the focus continues to be on off-premise. Our distribution width is about 93%. And we have a very strong, what we call as PJP, permanent journey plan discipline. We have automated the sales calling process of our TSEs onto the retail to be able to get enough data and diagnostic in terms of how well we are covering the retail, what is the classification of retail, which outlet needs to be covered how many times. So there is a bit of a science that is at play when it comes to off-premise because we’re dealing with a very large universe. And combined with a tech intervention and automation, we are now using data to our advantage in terms of figuring out how do we improve and make the sales calls efficient.
We’ve also deployed — we are also using a tech platform to monitor the various incentives that we run for counter salesmen, which allows us the ability to directly communicate with them. So if I was a salesman in a market, it could be Gorakhpur, it could be Guntur, it could be Dhanbad. I know — as an individual, I know what is the incentive offered to me. I know what am I earning. I know what I need to do to earn that incentive. So, we have seen a significant change in the engagement of the counter salesmen because now we are talking one-on-one. We are not necessarily relying on a sales guy, a salesperson to reach there and inform and guide. Pretty much it’s an app on their phone, and they can actually see what they are making. So that’s really the big focus as far as the off-premise is concerned.
On the on-premise side, with the ABDM portfolio, the focus is on key accounts. So, the team that we’ve built out comes out — comes from significant knowledge of managing key accounts, managing travel retail because that requires a very different engagement. As you know, we’ve been able to get our listing done in The Taj. We’ve been able to get our listing done in ITC, also partially in Marriott. So that’s a very different skill set. So, we have to make sure that the teams bring in the skill set, how can we leverage technology, how can we leverage data and how can we start taking decisions that will help us to get that distribution edge.
On top of it, one big initiative that we are doing is digitizing the entire training program because till about a year back, one and a half years back, most of our sales team was really selling Officer’s Choice, Officer’s Choice Blue, Sterling Reserve B7 and a few other brand ICONiQ. But now they also need to carry right from Zoya all the way to Arthaus.
So, we have now digitized our entire training program in terms of rein selling, in terms of what makes a brand unique, what are the unique cocktails associated with it, what is the trivia. And once the whole digitization process will get completed, which we are targeting over by end of next quarter, which means every salesman, whether it is in Dibrugarh or it is in Goa, should be able to access information on the brand, quiz, FAQs, should be able to answer the question of the retailer or the consumer. So, combination of the right manpower, technology, data, bringing the right training intervention, is the way we are maintaining our distribution edge.
Karan Kamdar
Great, sir. Sir, if I may ask, what is your on-premise currently? And where do we see it over the next few years as a percentage of sales?
Alok Gupta
So our on-premise of distribution is at about 40% premium on-premise distribution is 40%, which is relevant for ABDM. I think the way to look at is we should see about 5% to 7% increase in distribution quarter-on-quarter. So, we should exit next year, say, at about 65%, 70% distribution reach.
Karan Kamdar
Distribution reach, I mean as a percentage of volumes, what would it be, maybe P&A volumes?
Alok Gupta
So as far as P&A volumes are concerned, it’s really 98 to — I mean, in P&A, it’s largely an off-premise revenue, right? But as far as the ABD Maestro portfolio is concerned, it will be like 25%, 75%, 25% coming from premium HoReCa and 75% coming from retail.
Karan Kamdar
25%, yes, okay, perfect. Thanks. Thank you so much.
Operator
Thank you. Next question comes from the line of Tanmay Gupta with Bank of India Mutual Fund. Please go ahead.
Tanmay Gupta
Yeah. Hi sir. Thank you for the opportunity. So, my question is towards the mass [Speech Overlap]
Operator
Mr. Gupta, sorry for interrupting. We cannot hear you. Can you come a little closer to the mic and speak?
Tanmay Gupta
Sure. Can you hear me now?
Operator
Yes.
Tanmay Gupta
Okay. So, the question is regarding to the mass segment. So [Speech Overlap]
Operator
Mr. Gupta, once again, sorry for interrupting. We cannot hear you. Can you come a little closer to the mic and speak?
Tanmay Gupta
Now it’s audible.
Alok Gupta
I’ll repeat the question. Why don’t you go and ask a question, I’ll repeat it for you. Go ahead, please.
Tanmay Gupta
Thank you. Okay. So, the question is regarding the mass premium segment. So, you mentioned that there has been 7% impact due to Telangana. So even after factoring that, we are seeing around 5% degrowth in last two quarters consistently. So, first of all, how do we restrict this loss or losing the market share? Or either we should expect that this segment will be like 4.5 million to 5 million run rate quarterly going forward?
Alok Gupta
So, I’m going to just repeat the question for benefit of others who are listening in. Your question is that the first — that we’ve seen degrowth in the mass premium because of Telangana and Maharashtra. Going forward, what will be the source of growth, right? Is that largely your question?
Tanmay Gupta
Yeah. No. Again, the question like, sir, like we are making some — how would we restrict the loss? Like even after factoring these two states, we are still around 5% degrowth, right, in terms of volume for the last two quarters?
Alok Gupta
Right. So, I think going state by state, we are expecting Q4 to be back to normal, and therefore, we expect our regular volumes to pick up in Telangana. So that’s one. Secondly, I spoke about the big opportunity in Andhra Pradesh, where currently brandy, let’s say, a mass premium branded segment is nots 12 million cases in which we currently do not operate. Now we have our approvals in place, and we are hopeful of starting our billing in quarter four. So even with a reasonable market share of 15%, 20%, I think we are looking at another 1.5 million — about 2 million cases to come from the mass premium brandy segment in which we were not operating. So, I think the source of growth for us is going to be a Telangana getting back to normal and our entry into the branded segment in the state of Andhra Pradesh in the mass premium segment where we were not operating. Of course, our focus will continue on growing our volume in another state. For example, UP will continue to deliver growth and many other states will deliver growth.
I think one more point which we have not stressed enough is the fact that we have applied through Minakshi, our subsidiary to participate in the MML category. And we believe that we’ll qualify to participate in the MML category. And if we were to get those permission, then that will open up a significant growth opportunity for us. It’s not factored into our guidance. This will be on top of whatever guidance we have given. So just wanted to sort of give you a 30,000 feet view on where do we see — where do we think the growth will come from.
Tanmay Gupta
Okay. So going forward, we can expect like 4Q could be the normalized quarter, and we can expect 5% around mid-single-digit volume growth in this segment. Is that right understanding?
Alok Gupta
Yeah. So, I think in the mass premium segment, we should look at a low single-digit growth. I don’t want to put a number to it. P&A will continue to grow at double digit, high double digit, and that should get us to a near double-digit growth with a mid-double-digit growth in terms of volume — value.
Tanmay Gupta
So overall, mid-double-digit growth because of these two things?
Alok Gupta
Mid-double-digit growth in terms of value and early double-digit growth in terms of volume.
Tanmay Gupta
Okay, sir. And sir, in P&A, how should we like measure the growth or success story in the ABD Maestro portfolio? I understand you mentioned about Zoya, which is doing phenomenally well. But any KPI, if you want to highlight, which we should track for this portfolio?
Alok Gupta
So, I think there are — the segment is about 12 million cases and continues to grow fastest within the alcobev space. So, if you were to look at the current 12 million, 13 million cases, likely to grow to in the next three to five years, let’s say, 17 million, 18 million cases. Our portfolio approach is that if we can meaningfully carve out a single-digit market share of this large portfolio, then it should have a significant impact both in terms of value and in terms of the EBITDA that it will make.
There is one more opportunity that will come our way, which is post UK FTA implementation, we believe that there will be an opportunity for us to participate profitably in the value Scotch segment. Currently, the value Scotch segment is growing, but there is no money there. So, we are sort of brand ready in the sense that as and when the India UK FTA is implemented, we would like to participate in the value Scotch segment. As you know, of the 12 million, 13 million cases in luxury, about 50% is value Scotch. And currently, we are not playing in that segment because there’s no money to be made. So, I think ABD Maestro will have a significant role to play in terms of driving our value growth and also in terms of adding to our margins.
Tanmay Gupta
Okay. And lastly, sir, this P&A volume growth, if I look at it, it clocks at around 19% for this quarter. What is this Telangana impact doesn’t have happened, then what would be the growth? Like it should be continued at 25%?
Alok Gupta
Well, actually, for Telangana, like I had mentioned earlier, the P&A industry in Telangana grew at about 17%, and we also grew at about 17.5%. Telangana impact was largely — Telangana change in the sort of — the license disruption that happened actually hit just the mass premium segment. P&A grew there at 17%.
Tanmay Gupta
Understood. Thank you very much sir.
Operator
Thank you. Next question comes from the line of Vaibhav Gupta with Bowhead India Fund. Please go ahead.
Vaibhav Gupta
Hi sir. Thank you for the opportunity. With regard to your brand launch pipeline, I just wanted to understand, do we plan to launch 2 brandy brands, one in the P&A and one in regular and one more P&A what and what would be the typical price points?
Alok Gupta
Yeah. So, we are looking at a branded launch in the mass premium segment, in the Prestige segment. And we already have Kyron, which is our premium brandy. And the reason I’m mentioning this to you is that, we have a reasonable market share of 25% in the two markets that it operates is in Telangana and in Andhra. Now that we have received CSD approval, we are going to look at carving out growth from CSD as well. Of the million case segment, roughly about 27% of sales comes from CSD. So, it’s a very large cohort in terms of driving the Kyron sales. So, a brandy in the mass premium segment, a brandy in the Prestige segment and a brand in the premium segment. So, three brandy brands.
Vaibhav Gupta
Okay. So I understand Golden Mist would be around INR1,000 price point. How is Kyron placed?
Alok Gupta
Kyron is roughly INR1,400.
Vaibhav Gupta
Okay. Okay. And sir, what about the P&A vodka brand? What are the plans there and a typical price point at which you would be looking to launch?
Alok Gupta
So, we’ve already launched the brand in Telangana. It’s currently at the sort of the market width of distribution — driving the width of distribution. It’s called Golden Mist, and we’ll expand it in the coming quarters.
Vaibhav Gupta
Sir, I was asking about P&A vodka brand.
Alok Gupta
P&A vodka brand. P&A vodka brand, we’re looking at Q1 next financial year. The segment is large and growing, as you know. And we’re quite excited about the new brand launch in the P&A vodka.
Vaibhav Gupta
Got it. Got it. And just one final clarification. So, our exit run rate in the luxury ABD Maestro portfolio is around INR40 crores, and we would be doubling for the next two years to reach around INR160 crores, INR200 crores, right, sir?
Alok Gupta
That’s what we are targeting.
Vaibhav Gupta
Sure. That’s all from my side. Thank you, sir.
Alok Gupta
Thank you.
Operator
Thank you. Next question comes from the line of Chetan with Systematix Group. Please go ahead.
Chetan Mahadik
Yeah. Hi. Thank you for the opportunity. Sir, just wanted to understand our higher A&P spend had, partially offset our gross margins this quarter and which were basically towards the luxury brands. So, going ahead, how should we look at A&P spend? And is this 18% margin guidance taking into consideration, say, the elevated promotional spends, which will come ahead?
Alok Gupta
Yes. So, the 17% to 18% guidance takes into account the increased A&P investment, both in our portfolio at ABD and also the portfolio at ABDM.
Chetan Mahadik
Okay. Got it sir. Okay. Thank you.
Operator
Thank you. Next question comes from the line of Avnish Tiwari with Vaikarya Change LLP. Please go ahead.
Avnish Tiwari
Hi. Since you’re making investments in UP and you articulated rationale for them, can you compare the state policy environment in UP in terms of your outlook as well as the competitive environment in the categories which you are trying to go into?
Alok Gupta
I think the framework of UP has been fairly progressive. We have seen a policy that drives premiumization, therefore, healthier margins for the industry. We also saw last year that the incidence of excise duty payment was moved from the manufacturer to the wholesaler that made the entire industry more working capital efficient because the duty funding moved to the wholesaler. We are also hearing of the fact that the UPML, which is a large category will move from molasses-based ENA to a grain-based ENA. So that is extremely good news because we are looking at setting up a state-of-the-art ENA distillery in UP, which means there’ll be a very, very large market for ENA in that state.
And what it has essentially done is that it has created a positive investment environment because when it’s a larger market where you’re making money and it is working capital efficient, like we are setting up. We’ve acquired NICOL. We are setting up a state-of-the-art fully automated bottling unit there. We are also looking at expanding the ENA capacity in time to come. The state actually has made itself very attractive in terms of drawing investments. So that would be my thesis on UP as a state.
As far as competitive landscape is concerned, I think it’s no different than any other market, except having a large asset base, manufacturing asset base in UP gives you a definite edge, and that’s what we are trying to build in UP.
Avnish Tiwari
And within that category, now this is more on the liquor consumption. So, let’s say, the categories you are present versus, for example, beers or some other category, where is the UP as a consumer is picking up more, which categories volumes are growing the highest?
Alok Gupta
I am afraid I do not have the numbers on me ready, but we’d be happy to get some data out and share it with you.
Avnish Tiwari
Okay, no worries. Thank you very much.
Operator
Thank you. Next question comes from the line of Abhijeet Kundu with Antique Stock Broking. Please go ahead.
Abhijeet Kundu
Yeah. Hi, Alok. Great set of numbers. So, my — I had two questions. One was on ICONiQ White. Now everyone has a concern that ICONiQ White has — I mean, the base has become pretty large and going ahead, the growth may not be as substantial. But still, there should be a good amount of scaling up opportunity, right? Because no one — about two years back, no one thought that this brand would scale up so fast and do so well. So — and other brands, when they grow to this size, there have been very few such instances of a brand doing so well and going to this — I mean, scaling up to this size in such a short time. And primarily, it has been driven by these four states. So, you would have some — so my question was that you would have some more scaling up opportunities in other states also, right? Because general channel checks also suggest that in West Bengal also, you have been doing well in ICONiQ White. So, there would be such states where you would be getting some fillers and you can still scale up ICONiQ White and still grow that brand even from these levels. My first question was this.
Alok Gupta
Yeah. Thanks, Abhijeet. I think I would agree with your thesis that apart from the four or five large markets that the brand has is a reasonable presence. There is an opportunity across many markets. The brand — last year, we did 5.7 million, we should be crossing 10 million. It is happening because the brand is growing practically in every market in some markets significantly higher in some markets higher, right? So all markets continue to contribute.
The brand is already running at 1 million case ARR that gets us to about a 12 million case run rate, put some growth on top of that. I — we’ll maintain our position that this brand has the ability to be a market leader, whether it takes one and a half years or it takes two years. That’s a matter of time. Also, what makes ICONiQ an interesting case is that it is getting larger share of new consumers who are moving into the segment, largely because it’s a fresher, more younger brand. And if the first-time consumer who is moving at this price point would look at what are their peers franchising and therefore, ICONiQ comes through the word of mouth, which is very, very strong.
In addition, there are two more growth hacks. One, like I spoke about is CSD, where we have received our approval. It’s a fairly large segment, and therefore, that will also add to the ICONiQ growth. And international markets, we are currently shipping to about nine countries. Our footprint will be 35 by the end of this financial year. And therefore, that gives us a very long distribution opportunity even in the international market. So that’s really where we are with brand ICONiQ. We stay optimistic.
I think I will just connect to a question that was asked to us. I think the important thing is that we do not take the success for granted, and we continuously stay hungry about driving the growth, and also recognize that there is a change in the competitive landscape, and we have a program that recognizes it and maintains the growth momentum.
Abhijeet Kundu
Okay. Great. My second question was on Zoya. So Zoya, how do you see the brand evolving over the next 2 years? What would be the ARR right now? I mean, something on that.
Alok Gupta
So, we’ve said this earlier that when we started our journey in the luxury segment, by design, we are a whiskey forward company, 99% of our revenue comes from whiskey. So, by design, we said that our first luxury brand, if you make it non whiskey, it will be really stress testing our capability in terms of building brands, blend and route to market. So, I think to that extent, we are quite happy with what we’ve done with Zoya.
Zoya, of course, operates in a segment, which is not the largest segment, but from a gross margin perspective, the highest gross margin category. Gross margins are above 70%. We’ve got two new flavors launched. We’ve now shifted to three countries. So, I think Zoya will continue its growth journey, both in India and overseas market, but it will be limited by the size of the market. The portfolio that we’ve now built out, some of the newer brands, for example, the Irish whiskey, as you know, is one of the fastest-growing category in India, and it’s a single brand play.
So, we are quite excited about A, which is the Irish whiskey. If you look at Woodburns and you look at YELLO, the two craft whiskeys that we have, Indian whiskeys that we have, again, very excited about these price points and these products because they will scale up in terms of larger volumes. So, Abhijeet, like I said earlier, I think the way to look at the ABDM portfolio, the ABDM business is at a portfolio level and not at a brand level because it reduces our cost of sale. When we go to a premium on-premise, we go with one brand, it’s binary, either the person buys it or doesn’t buy it. When we go with the portfolio, then we have the ability of at least making a sale, and that is proving to be true.
So apart from Zoya, I think some of the big volume drivers in time to come to my mind are going to be the Irish whiskey, Woodburn and YELLO. And once the UK FTA is in place, I think the opportunity that will open up in value Scotch is going to be tremendous.
Abhijeet Kundu
Understood. That’s it. From my side. Thanks.
Operator
Thank you. Ladies and gentlemen, as there are no further questions, we have reached the end of question-and-answer session. I would now like to hand the conference over to the management for closing comments.
Alok Gupta
Well, thank you once again for taking the time out and listening in. Thank you for all the questions. I think we are quite excited about quarter four and look forward to connecting again sometime in April and early May.
Operator
[Operator Closing Remarks]