Buy Radico Khaitan; target of Rs 2951: Sharekhan

Sharekhan's research report on Radico Khaitan

Radico Khaitan Limited’s (RKL’s) Q4FY25 performance was good with a volume-led ~21% y-o-y revenue growth and OPM rising 225 bps y-o-y to 13.6%, leading to 60% y-o-y PAT growth. The management eyes over 15% y-o-y volume growth in P&A segment in FY26. OPM improved by 150 bps in FY25, the management has guided for further 100 bps expansion in FY26 led by an improved product mix, backward integration and stable/declining raw material prices. Total debt reduced by ~Rs. 114 crore in FY25 to Rs. 631 crore at FY25-end. RKL targets a 35-40% debt reduction in FY26 and to become almost debt-free by FY27.

Outlook

Stock trades at 65x/50x its FY26E/FY27E earnings, respectively. We retain a Buy with a revised PT of Rs. 2,951.

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