During the April-June quarter (Q1FY21), the company’s Ebitda (earnings before interest, taxes, depreciation, and amortization) margin expanded by 233 basis points from 16.1 per cent to 18.4 per cent due to gross margin improvement.
The company’s profitability improved due to a better state & product mix and higher share of exports business. The recent price increase in one of the key liquor consuming states in south India also had a positive impact on our profitability. The month-on-month volumes indicate an improving trend and the management is confident of a normalized performance in the coming quarters.
Analysts at Dolat Capital remain constructive on Radico Khaitan story, led by expansion in addressable opportunity in premium whisky (90-100mn cases), and deleveraging trajectory. Over the last three years, the company’s experienced robust volume growth, price increases, premiumisation, raw material tailwinds, and thus deleveraging.
“Despite a tough backdrop of the economic slowdown in FY20 accentuated by lockdown in March, 2020, Radico Khaitan delivered a strong and profitable volume growth of 12.5 per cent vs. 0.5 per cent in for industry. The company’s objective is to drive growth that is led by profitable premium products. It remains confident to outperform the industry and strengthen market share in the years to come,” the brokerage firm said in FY20 annual report analysis. It maintains ‘buy’ rating on the stock with target price of Rs 507 per share.
At 11:26 am, Radico Khaitan was trading 4.5 per cent higher at Rs 433, as compared to 0.2 per cent rise in the S&P BSE Sensex. A combined 1.2 million equity shares have changed hands on the counter on the NSE and BSE so far.