Radico Khaitan Ltd. Conference Calls and Earnings Call Transcripts

Opening Remarks by Management

During Q3, the IMFL industry volume growth was muted at 1.5%; however, despite a subdued industry performance, Radico Khaitan continues to deliver robust growth and outperform the industry. Our volume growth has been broad-based across our brand portfolio across states. In October 2019, we completed the expansion of the malt plant for our Rampur Indian Single Malt. Over the next couple of years, we will be able to increase our production volumes.

After a strong traction in the international markets, we have launched Jaisalmer Indian Craft Gin in India in select states such as Goa and Delhi. More states are being added in coming months. Over the past few quarters, raw material prices have increased significantly. However, after picking out during the month of October 2019, ENA prices have been in a consolidation mode in November and December. ENA prices have increased by 2% quarter-on-quarter compared to Q2 FY2020 and 22% year-on-year compared to Q3 of last year. We are hopeful that with the improved monsoon and better crop this sugar season, raw material pricing scenario may be stable.

With the ongoing product mix change and price increases, we are confident about maintaining our long-term margin expansion trajectory along with increased operating cash flow. Given the significant cost push, our EBITDA margins are in a consolidation phase in FY2020 and from next year onwards we expect our margin to resume the expansion path.

During the third quarter, Radico Khaitan reported year-on-year volume growth of 13.9%, which was led by Prestige and above category growth of 21%. Our revenue from operations increased by 17.2% during the same period.

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