Radico Khaitan (Q1 FY14) - BUY - CMP Rs92, Target Rs125, Upside 35.9% - IIFL

- Radico reported 17.6% rise in Q1 net revenues driven by a strong 18.8% yoy increase in Prestige & Above brands which now account for 17.9% share of total volumes, up 168bps yoy; IMFL sales by value increased 14.6% while volume improved 7.6% on yoy basis

- Company received price increases in Bihar, Odisha and other key liquor consuming states whose benefit would be visible in the next few quarters

- Adjusted for Rs81mn in FX translation variations in foreign currency borrowings (Rs41mn in PY), EBIDTA improved 16.5% yoy vs headline increase of 9.7%; ENA prices increased Rs4.7/ltr or 12.9% yoy which led to ~38% rise in RM costs though offset to an extent by price increases take in FY13 and improved product mix; adjusted (for FX loss) PAT up 21.2% yoy to Rs306mn

- ENA prices are likely to be under pressure due to anticipated ethanol demand for blending program though company expects this to be offset to an extent by recent good monsoon that would augment molasses supply; we tweak our FY14/15 EPS estimates but retain BUY with revised 9-12 mth target of Rs125 (earlier Rs145)

Source : Equity Bulls

Keywords