Radico Khaitan Ltd. share price target

Reiterate BUY with TP of Rs 484 (32x Jun-20E EPS) vs. 40x for United Spirits (UNSP). Radico Khaitan (RDCK) reported healthy 1QFY19. Revenue/EBITDA/PAT grew by 26%/47%/87% YoY. IMFL volume growth of 19% YoY (30% in premium segment) is the key highlight. RDCK's presence in faster growing niche segment of Vodka and Super Premium brandy, abolition of monopolistic distribution in UP and low base effect owing to highway ban in 1QFY18 led to outstanding growth.

Reiterate SELL on United Spirits (UNSP) and initiate coverage on Radico Khaitan (RDCK) with a BUY, driven by more visible improvement in business trajectory and relatively affordable valuations. Indias liquor industry looks attractive on a top down basis, presenting a strong case for long term investors. High barriers to entry, inelastic demand (?), increasing social acceptance and premiumisation provide most of the rationale for this view. A closer look, however, reveals structural pain that dampens both volume and value growth. The industry remains at the mercy of a quagmire of state-specific regulations, ever increasing taxes, price control, distribution model changes and political interference.

RDCK is delivering on all fronts: sales volume growth, margin expansion, earnings growth and debt reduction. We forecast yoy EPS growth of 32% for FY19, 27% for FY20 and 25% for FY21. The earnings growth would lead to solid cash flow generation and ROCE...

Radico Khaitan Ltd (RKL) is expected to be a major beneficiary of decline in molasses prices. Molasses comprises of over 20% of its raw material cost and ~8% of its net sales. As per news reports, molasses prices have declined by upto 90% in the past 3-4 months. As per management, the prices may remain lower than its historical average in coming quarters. We have assumed 150-200 bps improvement in EBITDA margins assuming average prices to be at 25-35% lower i.e. ~Rs 250-300 per quintal for next 1-2 years Vs current ~Rs 40 per quintal. Further, price hike received in...

We initiate coverage on RDCK as a BUY with a price objective of Rs 210, representing a potential upside of 33% in the next 12 months. We arrived at the price target by applying 22 times PE multiple to earnings for the 12 months period to June19.

Radico Khaitan's (RKL) results for 3QFY2017 were below our estimates both on top-line as well as bottom-line fronts. The company's top-line grew by ~4% yoy to `415cr owing to the impact of demonetization, which led to a decline in consumer spending. Moreover, lower sales volume and subdued operating performance led to the de-growth in bot..

For 2QFY2017, Radico Khaitan reported results above our estimates both on top-line and bottom-line front. The company's top-line grew by ~11% yoy to `447cr on back of higher sales of premium products, while the bottom-line grew by ~27% yoy to Rs22cr on the back of improvement in volume and healthy operating performance. Going forward, we ..

For 1QFY2017, Radico Khaitan's results have come in line with our estimates. The company's top-line grew by ~3% yoy to Rs430cr on back of higher sales of premium products while the bottom-line grew by ~25% yoy to Rs22cr on the back of a strong operating performance and lower taxes. Top-line grew ~3% yoy: Volume growth during the quarter w..

For 4QFY2016, Radico Khaitan (RKL) outperformed our estimates on the top-line front although the bottom-line came in flat yoy. The company's top-line grew by ~10% to Rs378cr on back of higher sales of premium products while the bottomline came in flat on a yoy basis at Rs15cr due to higher interest costs and taxes. During the quarter the ..

Sales ahead of estimate, but margin falls short of expectation Radico Khaitan's (RDCK) net sales grew by 10.4% YoY to INR3.8b (vs. our estimate of INR3.7b) in 4QFY16, with underlying volume down 4.9% YoY to...