Radico Khaitan Ltd - Result Update - ACCUMULATE - TP Rs.236 - Kotak

Radico Khaitan Ltd (RKL) Q2FY18 results were ahead of our estimates. The net revenue for the quarter grew by 0.6% yoy to Rs 4.48 bn and was ahead of our estimates, led by above expected volume in the quarter, which grew by 4.3% to 4.7 mn cases. The impact of recent highway liquor ban started to normalize in Q2FY18 after the Supreme Court clarification which allowed highways liquor stores within municipal areas. EBITDA margins remain strong with 200 bps yoy improvement to 14.7% (Vs estimates of 13%) led by better product mix, lower raw material prices and reduction in selling expenses. The company's focus on reducing debt resulted in 14% yoy decline in interest expenses which resulted in 27% yoy growth in PAT to Rs 286 mn (vs estimates of Rs 226 mn). The management has maintain positive outlook on volume growth for H2FY18 along with sustainable margins led by increasing focus on prestige and above segment and price increase in southern states. We have upgraded our earning's estimates for FY18E and FY19E factoring in reduction in impact of highway ban and better margins profile. The stock is trading at PE of 29.1x/22.4x on FY18/FY19 revised EPS of Rs 7.6/9.8. We assign ACCUMULATE (Vs Buy) rating on the stock with target price of Rs 236 (Vs Rs 200 earlier).

Shares of RADICO KHAITAN LTD. was last trading in BSE at Rs.215.3 as compared to the previous close of Rs. 206.4. The total number of shares traded during the day was 858598 in over 8789 trades.

The stock hit an intraday high of Rs. 228.65 and intraday low of 208.4. The net turnover during the day was Rs. 189434846.

Source : Equity Bulls

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