Radico Khaitan rises as PAT grows 23% YoY in Q3 FY24

Radico Khaitan advanced 2.26% to Rs 1,759.90 after the liquor maker's consolidated net profit rose 22.65% to Rs 75.15 crore on 46.55% increase in net revenue from operations to Rs 1,160.91 crore in Q3 FY24 over Q3 FY23.

The companys profit before tax stood at Rs 98.13 crore in the December 2023 quarter, registering a growth of 28.43% YoY.

Total Indian Made Foreign Liquor (IMFL) volume increased 3.7% whereas Prestige & above category volume grew 20.2%. Prestige & above net revenue growth was 29.1% compared to Q3 FY23. Non-IMFL revenue growth was due to full capacity utilization of the Sitapur plant, incremental country liquor volumes from Sitapur coupled with the country liquor price increases received effective from 1 April 2023.

Gross margin during the quarter reduced to 41.8% compared to 41.3% in Q3 FY23, mainly impacted due to significant foodgrain inflation. Despite commodity inflation in the ENA and grain prices, the firm said that it has been able to sustain gross margins due to the ongoing premiumization and the price increases in the IMFL business.

Although, prices of certain packaging materials have softened recently, the company stated that it is cautiously monitoring the trends of Grain, ENA and glass bottles where volatility persists.

During the quarter, EBITDA grew 47.6% to Rs 142.2 crore as against Rs 96.4 crore recorded in Q3 FY23. EBITDA margin was unchanged at 12.2% for the third quarter on YoY basis.

The company stated that its strategy is to continue to make prudent marketing investments over existing core brands and new launches to sustain the growth and market share. During Q3 FY24, A&SP was 6% of IMFL sales compared to 5.3% in Q2 FY23. On a quarterly basis, the amount may vary but the breweries maker said it expects to maintain A&SP spend around 6% to 8% of our IMFL revenues to be able to drive the sales momentum.

The company has incurred Rs 864 crore on the Rampur Dual Feed and Sitapur Green Field projects since inception.

Net debt stood at Rs 669.5 crore as on December 2023. The net debt decreased by Rs 101.9 crore, sequentially was due a strong financial discipline and working capital management, stated the company.

Dr. Lalit Khaitan, chairman & MD said, Radico Khaitan has delivered another quarter of resilient performance with strong business fundamentals amidst a challenging operating environment. While the demand for the regular category brands was muted, premium brands growth remained robust. With positive macro indicators, continued government spending and a favourable consumer sentiment, we believe that the consumption should see an uptrend in the future. We are confident of the mid to long term potential of Indian Alcobev sector and Radico Khaitan remains well positioned to capitalize on this opportunity whilst steering the short-term challenges.

Abhishek Khaitan, MD said, During Q3 FY24, our Prestige & Above category brands delivered a strong 20% growth and now account for about 50% of total IMFL volumes. It is heartening to note that due to our focus on financial discipline, we have been able to reduce our net debt by over Rs 100 crore on sequential basis. We remain committed to our integrated growth strategy of a focused premium product portfolio, brand innovation, an agile organization and delivering value to our consumers and stakeholders.

Radico Khaitan is among the oldest and one of the largest manufacturers of Indian-made foreign liquor (IMFL) in India. It is one of the few companies in India to have developed its entire brand portfolio organically.

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