Radico Khaitan surges 18% in 4 days, hits record high; zooms 170% in 2021

Shares of Radico Khaitan hit a record high of Rs 1,233.85, up 5 per cent on the BSE in Friday’s intra-day trade, in an otherwise weak market, on expectations of a strong earnings performance in the October-December quarter, in view of robust demand for its products.

In the past four trading days, the stock of the breweries & distilleries company has surged 18 per cent. So far in CY 2021, the market price of Radico Khaitan has appreciated by 170 per cent, against a 20 per cent rise in the S&P BSE Sensex.

At 01:25 pm; it was trading 3 per cent higher at Rs 1,213.50, as compared to 0.54 per cent decline in the benchmark index. The trading volumes on the counter more-than-doubled with a combined 1.7 million equity shares having changed hands on the NSE and BSE.

In October, the company announced launch of two new premium Indian Made Foreign Liquor (IMFL) --Magic Moments Dazzle Vodka and Royal Ranthambore Heritage Collection Royal Crafted Whisky (blended malt scotch)--in the brown and white spirit categories. The management said both these brands have received very strong feedback from consumers as well as trade channels for its exclusive blend, exciting packaging and unique market positioning.

During Q2FY22, Radico Khaitan delivered a robust volume growth led by Prestige & Above category brands. However, earnings before interest, taxes, depreciation, and amortization (ebitda) margins  were down 15.7 per cent from 16.9 per cent a year ago.

This was impacted due to commodity inflation, particularly in the non-IMFL business. Despite a significant increase in the prices of packaging materials (dry goods), gross margins for the IMFL business remained broadly stable owing to a favorable premium product mix.

The management said it strongly believed that this was a temporary phenomenon and given the company's 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", it said.

Meanwhile, a technical analyst at HDFC Securities said the stock price is currently making an attempt to stage upside breakout of the upper range of the pattern at Rs 1,045-1,050 levels. Hence, a sustainable move above this area could have a sharp positive impact on the stock price ahead.

The overall chart pattern of Radico Khaitan indicates a long trading opportunity. One may look to create positional buy as per the levels mentioned above, the analyst said.