back to top
Sunday, May 26, 2024
34 C
Lucknow

Maintain ADD on Radico Khaitan – Outperformance continues, margin in line

Date:

Share:


Mr. Naveen Trivedi, Institutional Research Analyst, HDFC Securities and Mr. Varun Lohchab, Institutional Research Analyst, HDFC Securities

Radico posted a strong set of numbers with beat in revenue and an in-line EBITDA margin. Revenue grew 18.7% YoY despite a firm base (+15% in 4QFY20) vs HSIE 10%. IMFL volume grew by 8% to 6.3mn cases, P&A volume was up by a robust 16% to 1.8mn cases, while regular volume grew by 5% to 4.5mn cases. Premiumisation (P&A volume mix at 28% vs. 26% YoY) and market share gains continued. Gross margin was down by 143/240bps on YoY/QoQ to 48.4%, but FY21 margin was healthy (up 170bps to 50%). A&P expenses were up by 52% while control on other expenses resulted in EBITDA margin expansion of 50bps YoY to 14.6% (in line, HSIE 14.6%). EBITDA grew by 23% YoY (19% 2-year CAGR) vs. HSIE 15%. Despite a challenging year, Radico has reported flat revenue and 10% EBITDA growth in FY21 (UNSP – 13/-34% revenue/EBITDA in FY21). We cut our EPS estimate for FY22 by 5% while maintain it for FY23. We increase target P/E multiple to 25x (20x earlier), given consistent outperformance, improving track record of launches, healthy margin expansion, and strengthening balance sheet. Our value of 25x P/E on Jun-23E EPS gives us a target price of INR 700. Maintain ADD.

Premiumisation trend sustains: Net revenue grew by 19% YoY (+15% in 4QFY20, +6% in 3QFY21) vs. HSIE 10%. IMFL volume was up by 8% YoY. Ex-AP, IMFL volume growth was in strong double digits. P&A volume grew by 16% YoY (+11% in 4QFY20 and +5% in 3QFY21) while Popular volume was up by 5% YoY (+14% in 4QFY20 and -1% in 3QFY21). Most of the company’s key markets returned to growth in the quarter. Product launches in P&A and increasing market share will be the key focus areas in the coming quarters. P&A realisation was down by 9% YoY (high base of 18% growth in 4QFY20, mix and export supported last year) but maintained on QoQ to INR 1,397/case. Industry is seeing several challenges but the premiumisation trend has sustained.

Margin expansion continues: GM declined by 143/240bps YoY/QoQ to 48.4% (-400bps 4QFY20, +232bps in 3QFY21). FY21 gross margin was healthy (up by 170bps YoY to 50.3%). S&D costs grew by 20% YoY as the company resumed investments in brand building. A&P was up by >50% and stood at 7% of sales (8.3% of IMFL sales in 4Q, 7.3% for FY21). Employee costs declined by 2% YoY while other expenses were up by 13% YoY. EBITDA margin expanded by 53bps YoY to 14.6% (flat in 4QFY20 and +238bps in 3QFY21) vs HSIE 14.6%. EBITDA grew by 23% YoY (HSIE 15%).

Con call and BS/CF takeaways: (1) 8PM Black crossed 1mn cases in FY21; (2) IMFL industry volume grew by 9/0.4/-14% during FY19/FY20/FY21, while Radico registered 11/12/-8%; (3) Home delivery (allowed in 6-7 states) is a structural change; (4) Delhi’s new policy will be good for the industry, similar to UP’s free trade model, which is the best in the industry; (5) Capex will be INR 700-800mn in FY22; (6) net debt stood at INR 2bn vs INR 3.8bn in FY20; (7) export contribution to volume stands at 6%.

Shares of RADICO KHAITAN LTD. was last trading in BSE at Rs.645.75 as compared to the previous close of Rs. 628.85. The total number of shares traded during the day was 102329 in over 9532 trades.

The stock hit an intraday high of Rs. 667 and intraday low of 627. The net turnover during the day was Rs. 66411993.





The above news was originally posted on www.equitybulls.com

Aabkari Times Editorial Teamhttps://aabkaritimes.com
Aabkari Times is a monthly news magazine on Liquor, Excise and Alcohol allied industry; being published since 2009 by the expertise of retired excise dept. associates and alco-bev industry professionals as our editorial team. Our magazine contains different new alco-bev strategic and new brand launch articles as well as news on recent govt. policies, trends on alcohol industry and other important data relevant to the distilleries and industry at the mass.

Subscribe to our magazine

━ more like this

Oil Marketing Companies Seek Bids for Ethanol Supply in ESY 2023-24

In ESY 2023-24, Oil Marketing Companies (OMCs) are seeking bids for the supply of approximately 66 crore litres of Denatured Anhydrous Ethanol. Bidders are...

Haryana’s New Excise Policy to Raise Liquor Prices, Introduce Tracking System

The Haryana government has given the green light to a comprehensive excise policy for the fiscal year 2024-25, slated to take effect from June...

Radico Khaitan Unveils Last Three Bottles of Rampur Signature Reserve at Hyderabad Airport Duty-Free

Radico Khaitan proudly marks its entry into Hyderabad Airport Duty-Free, unveiling the last three bottles of the globally acclaimed Rampur Signature Reserve Indian Single...

Karnataka Government Elevates Liquor Retail with Premium Boutique in Bengaluru

The Karnataka government has inaugurated a high-end liquor boutique in Bengaluru, located at Basaveshwara Nagar, marking a significant step in enhancing the state's retail...

New Year Cheers : A State-by-State Look at India’s New Year Liquor Surge

As the revelry of New Year's Eve subsides, India witnesses a notable surge in liquor sales, indicating a vibrant start to the year. Here's...
spot_img