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Radico Khaitan - Inline, Healthy, Strong Premiumisation At Play: Dolat Capital

Stellar growth in P&A (Indian made foreign liquor) and non-IMFL business

<div class="paragraphs"><p>Range of Radico Khaitan Ltd.'s liquor brands. (Source: Company website)</p></div>
Range of Radico Khaitan Ltd.'s liquor brands. (Source: Company website)

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Dolat Capital Report

Radico Khaitan Ltd.’s Q2 FY24 was healthy. Revenue/gross profit/Ebitda/adjusted profit after tax grew by +21.5/29.1/34.6/19.4% YoY.

These was led by robust revenue growth in Prestige and Above at +35.6% YoY, non-Indian made foreign liquor +49.1% but off-set partly by decline in Popular of 16.5%. Protit after tax trailed Ebitda due to higher depreciation and amortisation and interest costs.

Radico Khaitan's FY23-26E is expected to be a strong earnings year (~34% compound annual growth rate) driven by-

  1. strong growth in P&A in FY24-26,

  2. volume recovery in Popular in FY25-26,

  3. stabilisation of raw material/softening in FY25-26,

  4. ~12-14% price increase coupled with robust volume growth in CL in FY24,

  5. benefit from backward integration and

  6. as financial leverage plays out.

Valuations (63/44/35 times FY24/25/26E earnings per share) captures this optimism but as growth pans out, we expect further re-rating. Driven by plethora of triggers,strong premiumization and execution, reiterate 'Buy' with target price of Rs 1,850 at 50 times FY26E EPS (earlier Rs 1,640 at 50 times FY25E EPS).

Click on the attachment to read the full report:

Dolat Capital Radico Khaitan Q2FY24 Result Update.pdf
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