Accumulate Radico Khaitan; target of Rs 368: Dolat Capital

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26 Aug, 2025 12:21

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Radico Khaitan (RDCK) Q4FY20 was healthy on operating front. Despite Covid, revenue grew by a healthy 15% YoY. The GP growth was muted at 5%. Yet, EBITDA grew by 15% due to lower other expenses. Over the last two years, RDCK experienced robust volume growth, price increases, premiumisation, RM tailwinds, and thus de-leveraging. RDCK’s revenue/EBITDA/PAT grew at an impressive CAGR of 11.7/28.5/52.5% over FY17-19. Net debt declined from Rs 9.5bn in FY16, to Rs 3.8bn in FY20. As per mgmt as on date, net-debt stands at Rs 3bn. We remain constructive on RDCK story due to expansion in addressable opportunity in premium whisky, premiumisation, and deleveraging trajectory. However, the covid led disruption and higher taxation may impact volumes. Delay in payments from states may further impact WC. We believe this is transitionary.

We believe this is feasible. While we are not ascribing a higher multiple due to near-term covid led disruption, we would keenly watch the pace of recovery. This no way undermines our positive view on RDCK. Post the recent run-up we downgrade RDCK a notch from BUY to Accumulate with TP of Rs 368 @ 20x FY22E EPS (vs. Rs 352 earlier @ 20x). We value RDCK at 43% discount to UNSP target multiple of 35x. RDCK is trading at attractive 34/18x FY21/22E EPS vs. 70/42x for UNSP.

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