ICICI Direct Has Given 'Buy' Call To This Liquor Stock For 23% Upside, Net Revenue Grew To Rs 813 Cr

In its recently published report ICICI Direct, a reputed brokerage firm, has given a 'buy' call to Radico Khaitan Ltd, a leading manufacturer of Indian Made Foreign Liquor for a target price of Rs 960. The company is also a supplier of Indian made Indian liquor (IMIL) and bulk alcohol in India. IMFL segment comprises ~80% of consolidated revenues. The rest is contributed by IMIL and bulk alcohol. P&A volumes contribute 30% to overall IMFL volumes (rest by popular).

Stock Overview: CMP, Target price, Return, Market Cap, 52 Week low & High

Friday, 03 June 2022, the shares of Radico Khaitan Ltd are currently trading (CMP) at Rs 782. It was opened at Rs 797.25. The previous close was Rs 786.55. The stock has the potential to gain 23% in 12 months. Its share price in last one year gained close to 25%, however, in last 1 month, it has fallen. Its 52-week low level is Rs 609.15, and 52 week high is Rs 1,294. Radico Khaitan Ltd has a market capitalisation Rs 10,544 core.

Q4FY22 Results

According to the ICICI Direct, Margins were impacted due to a sharp rise in input costs. Net revenues grew 18% YoY to Rs 813 crore, and IMFL volume grew 16% YoY. EBITDA de-grew 21% to Rs 80 crore with margins at 9.8% (vs. 14.7% in Q4FY21). Subsequently, PAT de-grew 32% to Rs 50 crore.

ICICI Direct Suggests buying for a target price of Rs 960/share

In spite of the current inflationary environment being faced by the liquor sector, Radico Khaitan has been steadily building up its premium portfolio (31% of volumes). Also, with its vertically integrated model and price hikes in a few states, it remains resilient in the medium to long term. 'We remain positive on the stock and maintain our BUY recommendation. We value the stock at Rs 960 i.e. 33x P/E on FY23E EPS," the brokerage has said in the report.

Key triggers for future price performance

According to the ICICI Direct, "Newer capacities would ensure enough availability of grain-based ENA to address Radico's higher growth expectations (expect margins to remain at elevated levels). Pan-India launch of new super-premium spirits and gaining a favourable foothold in the fast-growing segment. Continued launches in premium whisky space. Nearing net-debt free status with return ratios reaching 20%+ levels."

Radico Khaitan Ltd

Radico Khaitan Ltd (earlier Rampur Distillery Company) is among the largest manufacturers of Indian made foreign liquor (IMFL) in India. The company is also a supplier of Indian made Indian liquor (IMIL) and bulk alcohol in India. Radico Khaitan Ltd commenced its operations in 1943 and over the years, emerged as a major bulk spirits supplier.

The company has over 75 years of experience in spirits making, Radico Khaitan has evolved into a leading IMFL company with a highly reputable brand portfolio. Radico Khaitan Limited started its own brand in 1998 with the launch of 8PM Whisky. From building a strong manufacturing platform and developing a robust pan India distribution network to expanding its premium brand portfolio, Radico has come a long way.

Radico Khaitan Ltd is one of the few companies in India to have developed its entire brand portfolio organically, with in-house capabilities. With over 15 brands including four millionaire brands in its portfolio - 8PM Whisky, Magic Moments Vodka, Contessa XXX Rum and Old Admiral Brandy the company is a leading manufacturer of Indian Made Foreign Liquor in India.

Disclaimer

The stock has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decisions.