United Spirits Weighs RCB Stake Sale as IPL 2026 Nears: A Move to Sharpen Core Focus

As the IPL 2026 season draws near, speculation has already started around one of the league’s most valuable franchises — Royal Challengers Bengaluru (RCB), as its owner, United Spirits Ltd (USL), begins a strategic review of its investment. The review, expected to conclude by March 31, 2026, could result in a sale, partial divestment or restructuring of Royal Challengers Sports Private Ltd (RCSPL), the wholly owned subsidiary that manages RCB’s men’s and women’s teams.

Following the announcement, shares of United Spirits closed at Rs 1,416, down 2.39 per cent, as investors digested the news of a potential portfolio reshuffle. While the RCB franchise has been a valuable asset since USL’s acquisition in 2008, the company now considers it non-core to its primary alcoholic beverages business.

Strategic Portfolio Realignment

USL, the Indian arm of global spirits major Diageo Plc, has been consistently rationalising its portfolio to focus on high-return alcoholic beverage operations. The RCB review reflects this disciplined capital allocation strategy aimed at maximising shareholder value.

Praveen Someshwar, MD & CEO, stated, “RCSPL has been a valuable and strategic asset for USL; however, it’s non-core to our alcoholic beverage business. This step reinforces USL’s and Diageo’s commitment to continue reviewing its India enterprise portfolio to enable sustained long-term value delivery.”

Diageo, which holds 56.7 per cent in USL, is reportedly seeking a valuation of around USD 2 billion for the RCB franchise, underscoring the strong brand value and global recognition the team commands. With a market capitalisation of Rs 1.03 lakh crore, negligible debt, interest coverage of 21.8x and cash reserves of Rs 2,903 crore, USL’s balance sheet remains among the strongest in India’s consumer goods sector. The company’s financial flexibility allows it to monetise non-core assets and redeploy proceeds into high-growth, premium brands or potential shareholder returns.

Financial Performance: Core Business Momentum Remains Strong

USL’s Q2FY26 performance reaffirmed the strength of its underlying operations.

• Consolidated net sales: Rs 3,173 crore (+11.6 per cent YoY)
• EBITDA: Rs 660 crore (+31.5 per cent)
• Profit after tax: Rs 464 crore (+36.1 per cent)
• EBITDA margin: 21.2 per cent, up 337 bps YoY

The growth was led by the Prestige & Above (P&A) segment, which includes brands like Antiquity, Signature and Royal Challenge, growing 12.4 per cent year-on-year and now contributing over 88 per cent of USL’s total revenue.

For H1FY26, consolidated net sales stood at Rs 6,194 crore (+10.5 per cent) and PAT rose 6.7 per cent to Rs 881 crore. Even the sports vertical (RCSPL) posted 15.8 per cent growth, benefiting from RCB’s strong on-field and commercial performance.

Credit rating agency CRISIL reaffirmed its AAA/Stable and A1+ ratings on USL, citing a robust liquidity profile, modest capex (Rs 300 crore annually) and consistent profitability improvements.

RCB’s Brand and Financial Valuation

The Royal Challengers Bengaluru franchise, managed by RCSPL, is currently valued at USD 269 million, making it the most valuable IPL team in 2025 according to Houlihan Lokey, Inc., the US-based global investment bank that conducted the league’s annual valuation study. The total enterprise value of all ten IPL franchises has reached an estimated USD 18.5 billion, marking a 12.9 per cent year-on-year growth.

IPL 2025 Franchise Valuations (Source: Houlihan Lokey, Inc.)

Houlihan Lokey estimated the total IPL franchise ecosystem at USD 18.5 billion in 2025, reflecting a 12.9 per cent year-on-year growth. RCB’s dominance was amplified by its maiden IPL title win in 2025, a massive global fan base and an enduring association with Virat Kohli. Sponsorship tie-ups with Puma, Birla Estates and Nothing further boosted its commercial profile.

Potential Sale Proceeds: Strategic Capital Deployment

If Diageo succeeds in fetching its target valuation of USD 2 billion (approx. Rs 16,600 crore) for RCB, the deal could become one of the largest franchise monetisations in India’s sports history. Given USL’s virtually debt-free balance sheet, proceeds could be strategically used to:

• Accelerate premiumisation by scaling brands such as Godawan, The Singleton and Black Dog;
• Enhance innovation and marketing through digital-led campaigns and experiential launches;
• Expand capacity and sustainability initiatives under Diageo’s “Grain to Glass” program;
• Return capital to shareholders via buybacks or dividends.

This aligns with Diageo’s global “Focus, Premiumise, Simplify” strategy, ensuring that capital stays concentrated in high-margin, brand-driven categories.

India’s Alcobev Sector: Positioned for Multi-Decade Growth

India’s alcoholic beverages sector continues to exhibit structural strength supported by long-term macro and cultural shifts:

• Premiumisation Momentum: Consumers are upgrading to premium and craft categories.
• Demographic Advantage: By 2030, 100 million new consumers will reach legal drinking age, accounting for 25 per cent of global growth.
• Cultural Evolution: Changing social norms are broadening consumption occasions.
• Rising Affluence: 700 million middle-class and affluent consumers expected by 2030.
• Innovation-led Growth: Craft spirits, flavoured variants and ready-to-drink cocktails are driving experimentation.
• Low Penetration: Per capita alcohol consumption remains modest, leaving vast room for expansion.

With a steady 3-year sales CAGR of 7.5 per cent and profit CAGR of 17 per cent, USL is structurally positioned to benefit from these secular trends.

Investor Takeaway

United Spirits' review of its RCB investment marks a pivotal portfolio move signalling sharper strategic focus and disciplined capital deployment. The company’s Rs 1.03 lakh crore market cap, robust margins and leadership in premium spirits provide a solid foundation to reinvest any potential sale proceeds into high-growth segments.

While a sale may reduce the brand’s visibility in cricket, it aligns perfectly with Diageo’s focus on core profitability and sustainable value creation. For investors, this decision reaffirms that USL is prioritising long-term compounding over ancillary prestige, a hallmark of mature capital stewardship.