Radico Khaitan Limited - On the recovery path - 1QFY14 Results Review - Antique

Radico witnessed recovery in performance during the quarter led by price hikes, richer mix and higher utilisation levels. Net Sales (including sales from tie up units) grew by 19.8% YoY to INR4.67bn led by about 14.6% growth in IMFL sales. Adjusted EBITDA and PAT grew by 16.5% and 21% YoY respectively to INR611m and INR306m. The EBITDA and PAT has been adjusted for a foreign exchange fluctuation loss of INR80.9m in 1QFY14 against INR41m in the previous corresponding period. This foreign exchange fluctuation loss related to ECB is a non-cash item and is included in other expenditure.

Outlook and Valuation

We are maintaining our EPS estimates for FY14 and FY15 at INR7.5 and INR9.1. The stock is currently trading at a PE of 12.3x FY14e and 10.1x FY15e. The company has underperformed expectations during the last 12 months leading to a de-rating of the stock. Going ahead, however with the recovery in performance, the stock is a candidate for re-rating. We maintain our BUY recommendation on the stock with a target price of INR145.

Source : Equity Bulls

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