DIST reported an EPS of LKR 0.92 in 1Q FY26 (vs. LKR 0.82 in 1Q FY25), supported by a 4% YoY increase in net revenue, primarily driven by price adjustments following excise duty hikes. Gross revenue increased by 15% YoY, the impact however, was partially offset by a 21% rise in direct tax expenses, driven by the broader revenue base. Cost efficiencies reflected in a 9% YoY reduction in cost of sales, while a 24% and 10% decline in distribution expenses and administrative costs, led to notable margin improvements. Gross margin expanded to 66%, up from 61%, while EBIT margin climbed to 60% (previous: 54%). Looking ahead, we expect a gradual rebound in spirits volumes and continued traction in beer, supported by entrenched brand strength, pricing power, and favorable macro tailwinds including tourism recovery, construction sector rebound, and rising incomes in key consumption bases. DIST’s consistent dividend track record, with a projected payout ratio above 90%, further enhances its appeal as a defensive yet growth-oriented consumer play. We reaffirm our BUY recommendation with a FY26E target price of LKR 62.00, implying ~37% upside from CMP. Including an expected FY26E dividend of LKR 3.20, we forecast a total return of ~43%.