Hold Radico Khaitan; target of Rs 1205: Sharekhan

Sharekhan recommended Hold rating on Radico Khaitan with a target price of Rs 1205 in its research report dated February 15, 2023.

Broker Research

March 13, 2023 / 19:09 IST

Sharekhan's research report on Radico Khaitan

Radico Khaitan Limited’s (RKL’s) Q3FY2023 numbers were muted, affected by sluggish volume growth, while higher input cost inflation affected margins. Net revenues grew by just 3%, while PAT decreased by 23% y-o-y (OPM down by 331 bps y-o-y to 12%). Sales volumes of Prestige & Above (P&A) segment grew by 14% in Q3 and 21% in 9MFY23. Volume growth momentum would sustain with Rampur Single Malt Whiskey and Jaisalmer Gin expected to grow strongly ahead of industry in FY2024. Backward-integration, price hikes undertaken in the key markets and better mix will help EBIDTA margin to improve from Q1FY2024. EBIDTA margins to stand at 15% in FY2024 and will consistently improve in stable input cost environment.

Outlook

Stock has seen good run-up of 18% in the past three months and is currently trading at 62.5x, 43.2x and 34.6x its FY2023E, FY2024E and FY2025E EPS, respectively. With risk-reward unfavourable and persistent near-term margin pressures, we downgrade our rating on stock to Hold from Buy earlier.

For all recommendations report, click here