What happened? USL, Diageo''s majority owned India subsidiary, has issued a preliminary fiscal Q226 (Sept-Q) sales update ahead of the release of Diageo group sales on Thursday 6th November. BNPP Exane View: USL (Diageo India) cal. Q3 LFL sales grew +11.5% in the Sept-25 quarter. We note that growth in the quarter was led by strong growth from the Prestige and Above portfolio (+12.4%), while the Popular brands also saw solid growth in the quarter (+9.2%). USL notes that the strong +11.5% sales growth in the quarter was driven by the re-entry of Andhra Pradesh, strong performance of innovation offerings and easy comps (cal. Q324 group LFL sales -0.8%), but comments that this was largely offset by adverse policy changes in the state of Maharashtra. Overall, we view the update from USL as a modest positive from a Diageo perspective. Diageo is scheduled to report its fiscal Q126 sales update next week on 6 November. Summary of key figures (by USL fiscal quarter) / Q226 profits: gross margin: +190bp; underlying EBITDA margin: +337bp. Note: marketing as % of sales 7.6% Context We estimate that USL (Diageo India) accounted for c.7% of Diageo''s FY25 sales.