Radico Khaitan Highest Price Target As Yet After Motilal Oswal Initiates Coverage With ‘Buy’ Rating

Motilal Oswal has initiated coverage on Radico Khaitan with a ‘Buy’ rating and a target price of Rs 3,000, citing the company’s strong premiumisation strategy, expanding brand portfolio, and solid growth outlook.

That's the highest price target among the analysts tracked by Bloomberg.

The brokerage sees Radico Khaitan — one of India’s oldest and largest Indian Made Foreign Liquor manufacturers — as well-positioned to capitalise on rising consumer aspirations and favourable policy dynamics.

Radico Khaitan has built a robust presence in the Prestige and Above (P&A) segment of the IMFL market, with a portfolio that includes iconic brands like Magic Moments, 8PM, Morpheus, Rampur Single Malt, and Royal Ranthambore.

Its P&A volumes have grown nearly fourfold in recent years to nearly 15 million cases, giving it an 8% share in the category. Vodka dominates the mix, comprising 50% of the P&A portfolio, and Radico holds over 80% share in the P&A vodka market.

Motilal Oswal noted that Radico has successfully upgraded its brand image, penetrating the premium and luxury segments with products priced between Rs 500 and Rs 8,000+. This strategy has helped it attract a broader consumer base while improving trade confidence and brand acceptance.

Radico has delivered impressive returns — a 25x stock gain over the past decade and 8x over the last five years — aided by consistent volume growth and premiumisation.

While gross margins have contracted due to elevated input costs (notably extra neutral alcohol and glass), Motilal expects a recovery, with gross margins forecast to rise 100-150 basis points to ~44% and EBITDA margins to expand to 16.2% by financial year 2028.

Between fiscal 2025 and 28E, the brokerage estimates a revenue CAGR of 16%, with Ebitda and profit growing at 22% and 30% CAGR, respectively. Valuing the stock at 60x Jun’27 EPS, it sees scope for sustained high valuations.

Radico has extended its reach to over 100,000 retail outlets and 10,000 on-premise locations. The company has also strengthened its geographic presence, with growth in states like Uttar Pradesh, Andhra Pradesh, Maharashtra, and Karnataka. Motilal highlighted favourable excise policy changes and rising premium consumption in these regions as tailwinds.

The recent India-UK Free Trade Agreement, which halves customs duties on whisky and gin imports, is expected to benefit Radico’s premium brands that use imported spirits for blending. Motilal estimates potential input cost savings of Rs 750 crore in financial year 2026 due to the reduced landed cost of imported spirits.

Radico currently trades at 67x FY26E and 53x FY27E P/E, with an estimated RoE/RoIC of 17%/19% in financial year 2027. Despite premium valuations, Motilal sees upside given the company’s strong earnings outlook and brand momentum.

Key downside risks include raw material price inflation, higher state excise duties, and rising competitive intensity.