Angel Broking's report on Radico Khaitan"For 1QFY2016, Radico Khaitan (RKL)’s results have come in above our estimates. The company’s top-line grew by a decent 6.7% yoy, mainly due to healthy growth in Prestige and above products segment. On the operating front, the company reported margin contraction, primarily on account of higher other expenses. Further, on the bottom-line front, the company reported a healthy growth due to lower interest cost and taxes."Outlook and valuation: "RKL has not performed well in the last two years due to increasing material costs (ENA is a key raw material) and with it not receiving significant price hikes from various states. We expect the company to perform well going forward in anticipation of easing material costs and on expectation of better price hikes. This would result in an overall improvement in the operating margin of the company. Also, with the company having reduced significant debt from its balance sheet, it would be able to report an improvement in its profitability. We expect the company to report a strong earnings CAGR of ~14% to ~Rs 88cr over FY2015-17E. Hence, we recommend a Buy rating on the stock with a target price of Rs 112", says Angel Broking research report.For all recommendations, click hereDisclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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