Radico Khaitan 3QFY2016 Results - Earnings outperform, top-line flat YoY - Angel Broking

Views of Mr. Amarjeet Maurya (Sr. Research Analyst - Mid Caps, Angel Broking) on Radico Khaitan 3QFY2016 Results:

Earnings outperform, top-line flat YoY

"For 3QFY2016, Radico Khaitan outperformed our estimates on the earnings front although the top-line came in flat YoY. Revenues rose to ~INR 401cr, which is lower than our estimate of INR 432cr. The soft top-line performance could be attributed to the company's shift in focus towards prestige and above products over higher volume mass market products.

On the operating front, the company's margin improved by 344bp YoY to 14.6%, primarily on account of lower raw material and selling & distribution expenses. The operating profit resultantly grew by ~27% to INR 58cr.The reported net profit grew by 19% YoY to INR 25.4cr (above our estimate of INR 23.4cr) on account of the strong operating performance and lower interest costs (in FY2015 the company repaid a significant amount of its debt; further debt reduction is also on the cards).

The company has not performed well in the last two years due to increasing raw material costs (ENA is a key raw material) and with it not receiving significant price hikes from various states. We expect the company to perform well going forward in anticipation of easing material costs and on expectation of better price hikes. This would result in an overall improvement in the operating margin of the company. We currently have a positive view on Radico Khaitan."

Shares of RADICO KHAITAN LTD. was last trading in BSE at Rs.113.4 as compared to the previous close of Rs. 109.25. The total number of shares traded during the day was 111275 in over 1533 trades.

The stock hit an intraday high of Rs. 115 and intraday low of 108.75. The net turnover during the day was Rs. 12550914.

Source : Equity Bulls

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