Vedant Fashions Concall Summary: Key Highlights and Q3 FY26 Results

Guidance & Outlook

• P&A Growth: Management reiterated its double-digit P&A growth algorithm and said 9M P&A growth remains broadly on track despite Andhra Pradesh base effects and Maharashtra disruption.
• Price/Mix: Management maintained its medium-term 6%–8% price/mix view, with current price/mix running at the higher end while Maharashtra headwinds persist and expected to normalize lower once those effects fade.
• Consumer Outlook: Management remains cautiously optimistic for the wedding season and the next couple of quarters, citing improving disposable income from GST cuts, tax relief, and a good monsoon, but flagged continued uncertainty around jobs and geopolitics.
• Maharashtra Risk: The biggest near-term overhang remains MML in Maharashtra, particularly in Popular and Lower Prestige, while management said the issue is playing out broadly as expected and is being addressed operationally and through industry action.
• FTA Benefit Timing: Management expects the India-UK FTA to begin benefiting reported numbers from Q2 FY27 / Jul-Sep 2026, with annualized bulk scotch savings estimated at INR110–120cr.
• A&P Spend: Full-year A&P is likely to be at the higher end of the historical range, or marginally above, reflecting top-end portfolio recovery and tactical support for portfolio competitiveness.

Capex & New Projects

• McDowell’s Pocket Pack: The company has launched McDowell’s pocket pack in Maharashtra and plans to extend it nationally over the next 2–3 quarters.
• Royal Challenge Push: RC continues to be supported through Choose Bold 3.0 and pocket-pack-led consumer penetration, particularly in Mid Prestige.
• Luxury Activations: United Spirits continued to invest behind premium platforms including Johnnie Walker experiential activations, airport visibility, and music-led cultural partnerships.
• Godawan Build-out: Godawan continued to scale via the CSD channel and curated luxury experiences, supporting the premiumization agenda.
• Innovation Engine: Don Julio crossed INR100cr NSV in 9M, becoming the company’s fastest INR100cr+ innovation brand and reinforcing tequila as a meaningful emerging growth driver.

Financial Performance

• Q3 P&A Volume: Reported P&A volume declined 2%, but was flat excluding the one-time Andhra Pradesh retail pipeline-fill impact in the base; excluding Maharashtra as well, Q3 P&A volume would have grown 6%.
• Q3 P&A NSV: Reported P&A NSV grew 8.2%; adjusting for Andhra Pradesh, NSV growth was about 10%, and excluding Maharashtra, around 14%.
• 9M Growth: For 9M FY26, overall volume and NSV grew 4% and 9%, while P&A volume and NSV grew 4.5% and 9.8%; excluding both Andhra Pradesh and Maharashtra, 9M P&A volume and NSV growth would be 7.1% and 12.3%.
• Price/Mix: P&A price/mix was a strong 10.2% in Q3 and 5.3% in 9M, helped by premium portfolio momentum and an adverse Maharashtra mix effect concentrated at the lower end.
• Commodity Basket: Input costs remain broadly stable, with bulk scotch the only structurally inflationary input, while most other commodities are holding in.
• Marketing Reinvestment: Marketing reinvestment was 14% of net sales in Q3 and 10.6% of net sales in 9M, reflecting heavier support behind Bottled-in-Origin and Bottled-in-India premium trademarks.

Operational Highlights

• Top-half Portfolio: Management highlighted strong momentum in the top half of the portfolio, led by luxury growth, premium acceleration from primary scotches and Smirnoff, and continued traction in Signature and Royal Challenge.
• Maharashtra Impact: The adverse Maharashtra volume impact is concentrated largely at the lower end of the portfolio, which mechanically boosted national price/mix in the quarter.
• Signature:Signature delivered strong double-digit festive growth and contributed to nearly double-digit Upper Prestige growth.
• Smirnoff:Smirnoff Minty Jamun has emerged as a breakout innovation and the primary growth engine for the White Spirits portfolio, helping India break into Diageo’s top five Smirnoff markets globally.
• Rest of India: Management described ex-Maharashtra growth as broad-based, not dependent on any single state, with rest-of-India performance characterized as healthy and resilient.
• Andhra Pradesh: After lapping the opening of Andhra Pradesh, management said the market continues to grow at or slightly ahead of national growth, helped by the company’s high share there.

Business & Strategy Updates

• Maharashtra Response: Management has doubled down on McDowell’s and RC, improved its pocket-pack price play, and stepped up market activation, while broader industry action is underway to seek a more level playing field.
• Premiumization Strategy: Management believes the current quarter validates the portfolio strategy, with premium and luxury momentum offsetting stress in lower-price segments.
• Strategic Review: On the IPL franchise asset, management reiterated that the strategic review remains on track for an update by March 31, 2026.
• Delhi Optionality: Management views Delhi as a future opportunity when the market opens up more fully, but said it is currently too small to materially change the national growth algorithm.
• Bulk Scotch Pricing: Management said bulk scotch procurement remains on a cost-plus arm’s-length basis, and still views Diageo Scotland pricing as competitive.
• Margin Structure: Management expects current gross margin levels to remain broadly in range, with higher bulk scotch costs likely offset by continued strong price/mix.