Radico Khaitan declines after Q2 PAT slips 4% YoY

Radico Khaitan slipped 2.87% to Rs 1,059.65 after the liquor maker posted a 4.3% decline in standalone net profit to Rs 69.26 crore in Q2 FY22 as compared to Rs 72.41 crore reported in Q2 FY21.

Revenue from operations increased by 12.5% to Rs 708.83 crore in Q2 FY22 from Rs 630.05 crore in Q2 FY21. Total IMFL volume growth was 7.1% year on year led by Prestige & Above category volume growth of 17.7%. Prestige & Above net revenue growth was 22.1% compared to Q2 FY21. IMFL sales value accounted for 80.2% (versus 79.5% in Q2 FY21) of the revenue from operations.

Standalone profit before tax rose marginally by 1.9% to Rs 94 crore in Q2 FY22 over Q2 FY21. EBITDA grew 4.1% to Rs 111.04 crore in Q2 FY22 from Rs 106.65 crore posted in Q2 FY21. EBITDA margin slipped by 126 basis points to 15.7% in Q2 FY22 from 16.9% in Q2 FY21.

Gross Margin during the quarter was 45.9% in Q2 FY22. Margin decline was due to commodity inflation, particularly in the non-IMFL business. Despite a significant increase in the prices of packaging materials (dry goods), gross margin for the IMFL business remained broadly stable owing to a favorable premium product mix.

Commenting on the results and performance, Abhishek Khaitan, MD of the company said, During Q2 FY22, we delivered a robust volume growth led by Prestige & Above category brands. Our new brand launches are expected to accentuate the premium volumes in the coming years. Although, the operating environment has improved significantly on a quarter-on-quarter basis, we have seen unprecedented levels input cost inflation which has impacted the profit margins, particularly for our non-IMFL business. We strongly believe that this is a temporary phenomenon and given our focus on premiumization, margins trajectory shall improve. During this period of uncertainty, we continue to focus on sustainable, premium volume growth and work alongside the supply chain to minimize the impact of input cost increases.

Finance cost decreased by 43.8% year on year to Rs 3.06 crore from Rs 5.44 crore. The company's cost of borrowing is one of the lowest in the industry due to a lower interest environment, stable profitability, strong capital structure and improved liquidity position. As of 30 September 2021, the company's net debt stood at Rs 118.94 crore which is lower than Rs 198 crore posted at the end of March 2021.

Radico Khaitan is one of the oldest and the largest manufacturers of Indian Made Foreign Liquor (IMFL) in India.

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