Radico Khaitan (RDCK) delivered healthy performance in 3QFY19. Revenue/EBITDA/PAT grew by 14.6/27/51% YoY. For 9MFY19, revenue/EBITDA/PAT grew at 18/37/69%. RDCK's niche segment (Vodka) and geographic presence (UP), premiumisation, price increases, RM tailwinds and distribution changes in the UP market have been the key factors driving superior growth. RDCK has effectively utilized its growth to de-leverage (net debt reduced from Rs 9.5bn to Rs 2.9bn in 3 years); for new launches, branding and promotions.
OutlookReiterate BUY with revised TP of Rs 592 (32x Dec-20E EPS) vs. 40x for UNSP. RDCK trades at relatively cheap valuation at 25/22x FY20/21E EPS vs. 47/37x for UNSP.
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