Kotak Securities' research report on Radico Khaitan
Radico Khaitan Ltd (RKL) Q2FY18 results were ahead of our estimates. The net revenue for the quarter grew by 0.6% yoy to Rs 4.48 bn and was ahead of our estimates, led by above expected volume in the quarter, which grew by 4.3% to 4.7 mn cases. The impact of recent highway liquor ban started to normalize in Q2FY18 after the Supreme Court clarification which allowed highways liquor stores within municipal areas.
The management has maintain positive outlook on volume growth for H2FY18 along with sustainable margins led by increasing focus on prestige and above segment and price increase in southern states. We have upgraded our earning’s estimates for FY18E and FY19E factoring in reduction in impact of highway ban and better margins profile. The stock is trading at PE of 29.1x/22.4x on FY18/FY19 revised EPS of Rs 7.6/9.8. We assign Accumulate (Vs Buy) rating on the stock with target price of Rs 236 (Vs Rs 200 earlier).
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