Radico Khaitan skids after Q3 PAT declines 5% YoY to Rs 77 cr

Radico Khaitan fell 2.47% to Rs 1049.30 after the liquor maker's standalone net profit declined 4.7% to Rs 76.71 crore in Q3 December 2021 as against Rs 80.53 crore reported in Q3 December 2020.

On a standalone basis, revenue from operations increased by 12% to Rs 765.99 crore in Q3 December 2021 from Rs 684.21 crore in Q3 December 2021.

Total Indian Made Foreign Liquor (IMFL) volume growth was 7.4% y-o-y led by Prestige & Above category volume growth of 18.2%. Prestige & Above net revenue growth was 21.5% compared to Q3 FY2021. IMFL sales value accounted for 82.1% (vs. 81.7% in Q3 FY2021) of the Revenue from Operations (Net).

Profit before tax fell 7% to Rs 100.64 crore in Q3 December 2021 over Q3 December 2020. EBITDA fell 4.2% to Rs 118.71 crore in Q3 December 2020 from Rs 123.98 crore in Q3 December 2020. EBITDA margin slipped to 15.5% in Q3 December 2021 from 18.1% in Q3 December 2020.

Gross Margin during the quarter was 46.2%. This was impacted due to commodity inflation, particularly in the non-IMFL business. Despite a significant increase in raw material prices, gross margin for the IMFL business were impacted moderately owing to a favorable premium product mix. Gross Margin has stayed stable on Q-o-Q basis.

The company's net debt stood at Rs 135.35 crore, a reduction of Rs 62.19 crore since March 2021 after capex on new projects of Rs 23.90 crore.

The firm's finance cost decreased by 42.0% y-o-y from Rs 5.39 crore to Rs 3.12 crore.

The company said its strategy is to continue to make prudent marketing investments over existing core brands and new launches to sustain the growth and market share. On a quarterly basis, the amount may vary but we expect to maintain A&SP to be around 7-8% of our IMFL revenues to be able to drive the sales momentum. In the P&A segment, we expect this to be double digit.

Dr. Lalit Khaitan, chairman & managing director said: "After a transformational journey over the years, we have seen our business model consolidate and become stronger, particularly during this period of the pandemic. We now have a very strong balance sheet and developed a portfolio of market leading premium brands. We are at an inflexion point and as we move forward into the next stage of growth, we are very excited to embark upon a judicious capex plan. This will enable us to expand our in-house capabilities to drive future momentum of the branded business along with securing raw material supplies. The investment that we are making is expected to be return accretive and will enhance value to all our stakeholders."

Abhishek Khaitan, managing director said: "During Q3 FY2022, our Prestige & Above category brands continued the robust momentum and delivered a 18.2% volume growth. After a strong start with UP and Maharashtra, Royal Ranthambore Heritage Collection-Royal Crafted Whisky and Magic Moments Dazzle Vodka have now been rolled out in 3 more states - Delhi, Karnataka and Haryana - and have continued to receive promising consumer response. In the month of December 2021, 8PM Premium Black whisky crossed monthly run rate of 2 lakh cases and 8PM family crossed 11 lakh cases. This truly reflects the strong consumer franchise that our brands enjoy. I am very happy to report that in January 2022, we have received the first order from CSD for Rampur Indian Single Malt Whisky and Jaisalmer Indian Craft Gin. Despite the unprecedented inflationary pressure, overall we are very encouraged with our premium brand performance. In the near-term, the operating environment is expected to remain challenging. In this scenario, we will manage our business with agility, while continuing to grow our premium brand portfolio."

Meanwhile, the company said its board approved two capital projects which would enable the company to capitalize on the future growth opportunities in the branded business along with securing raw material supplies.

The company plans conversion of its existing 140 KL per day molasses plant at Rampur, UP into dual feed ("Rampur Dual Feed"). The conversion would result into increased production upto 160 KLPD. The project would require investment of Rs 185 crore.

Further, the company also plan to establish a new greenfield grain based distillery in Sitapur, UP with production of upto 330 KL per day ("Greenfield Project"). This will require investment of Rs 555 crore.

The company will finance the projects with long term borrowings of Rs 370 crore and balance internal accruals.

Radico Khaitan is one of the oldest and the largest manufacturers of IMFL in India.

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