Radico Khaitan Limited (RKL) posted strong performance in Q1FY2024 beating our as well as street’s expectation with revenues and PAT growing by 26% and 9%, y-o-y respectively; OPM expanded by 31 bps y-o-y to 12.5% (improved by 304 bps q-o-q). Sales volumes of Prestige & Above (P&A) segment grew by 28% y-o-y beating the management’s guidance of 15-18%. The management is confident of maintaining high teens volume growth in P&A segment in FY2024. Backward integration, price hikes in key markets, easing of a few commodity prices and a better mix will help EBIDTA margin consistently improve in quarters ahead (targets 14-15% margin by Q4FY2024-end).
OutlookWith strong growth potential in premium segment and focus on becoming debt-free in next 3-4 years, RKL is good pick in the liquor space. It is currently trading at 60x and 42x its FY2024E and FY2025E earnings. We upgrade to Buy with revised PT of Rs. 1,660.
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Radico Khaitan - 05 -08 - 2023 - khanDiscover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
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