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Dolat Capital Report
Radico Khaitan Ltd.'s Q2 FY22 was in-line with volumes / revenue marginally above estimates off-set by muted gross margin due to high packaging material prices.
Gross margin were at 16-quarter low, a key negative.
Revenue/Ebitda/adjusted profit after tax were up 12.5/up 3.9/down 4.3% YoY (and up 24.3/28.9/38.7% versus Q2 FY20 versus up 10.1/up 2.5/down 7.9% for United Spirits Ltd.).
Radico Khaitan trades at attractive 36/31 times FY23/24E earnings per share versus 58/49 times for United Spirits (a ~37% discount).
Over FY18-21, Radico Khaitan's revenue/Ebitda/adjusted profit after tax compound annual growth rate was 10/15/30% versus down1/0/down 3% for United Spirits.
The recent launch of two new premium products shows the company's continued focus on creating a stronger premium brand portfolio.
Increase in raw material prices of packaging goods and potential surge in extra neutral alcohol and glass-bottle prices are near-term headwinds.
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