Buy Radico Khaitan; target of Rs 155: Nirmal Bang

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26 Aug, 2025 12:21

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Nirmal Bang is bullish on Radico Khaitan and has recommended buy rating on the stock with a target of Rs 155 in its June 1, 2012 research report.

“Radico Q4FY12 results were below estimates with Net Sales/ EBITDA/Adj. PAT growing at 16.3%/8.8%/(22.7%) mainly driven by lower off-take in CSD segment.”

“Radico reported 16.3% YoY revenue growth to Rs. 273.15 crores driven by volume growth in IMFL by 6.8% and supported by better price realization. The Company’s premium brands, Magic Moments and Morpheus registered a YoY volume growth of 16.6% and 52.5%, respectively. The flagship brand, 8PM Whisky also registered strong volume growth of 28.8% YoY. Contessa brand volume declined by 0.8%. Lower off take from CSD (Canteen Stores Department) led a dip in sales volumes. However, exports grew by a strong 92% YoY growth for the year. EBITDA was up by 8.8% YoY to Rs. 40.2 crores and down by 9.9% QoQ. The margin was down by 100 bps YoY to 14.7% and 70bps QoQ. The margin was subdued on account of higher selling and distribution expenses which was up by 38.7% YoY. Adj. PAT was down by 22.7% YoY to Rs. 13.5 crores and 43.2% QoQ. The Adj PAT includes Rs. 12.96 crores of loss in sales of the investment in the JV Company and foreign currency fluctuation losses. The Adj. PAT margin was 4.9% in Q4FY12 as against 7.4% in Q4FY11 and 8.1% in Q3FY12. The margin was under pressure due to the significant jump in interest and depreciation cost.”

“At CMP of Rs. 125, the stock is trading at a PE of 20.4x in FY13E and 15.1x in FY14E and EV/EBITDA of 9.5x FY13E and 7.8x FY14E. We believe Radico is set to continue with the structural transformation of its business fundamentals. Management appears to be successfully pursuing a strategy of “premiumization” and volume growth. Radico acquired of two brands in May 2012; Royal Lancer and Elkays Whisky in Mysore are expected to aid penetration in south India. The sugar production is expected to be robust in 2011-2012 and 2012-2013 which will increase the availability of Molasses. This will keep the molasses prices under pressure and improve margins going forward. We are upbeat on the positive outlook of the spirits sector in India and in view of the strong growth trajectory of Radico’s mainline brands, we recommend BUY. We have introduced FY14E estimates. We maintain BUY recommendation with a target price of Rs. 155 per share (FY13E),” says Nirmal Bang research report.   

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