Result Update: Radico Khaitan Ltd - ACCUMULATE - TP Rs.449 - Kotak

Result Update: Radico Khaitan Ltd - ACCUMULATE - TP Rs.449 - KotakRadico Khaitan Q1FY19 results were ahead of estimates in terms of revenue as well as earnings driven by robust volume growth of 19% on yoy, improvement in EBITDA margins and lower interest expenses.

Key Highlights

- The net revenue for the quarter grew by 25.6% yoy to Rs 5.2 bn and was ahead of our estimates of Rs 4.6bn, driven by 19% yoy growth in IMFL volume which was at 5.6 mn cases. Volume in Prestige and above segment grew at 30% yoy while Regular segment grew at 15% yoy.

- EBITDA margins in the quarter improved by 259 bps yoy to 17.7% led by premiumization, better realization due to price hike in certain states on yoy and lower raw material cost. The company expects improvement in EBITDA margins to continue based on better product mix, benefits of price hikes and lower raw material prices.

- The company is targeting at 14-15% volume growth in FY19E with 100-150 bps margin improvement and intends to be debt free in next 2-2.5 years.

Valuation & outlook

- We have factored in higher volume growth in Q1FY19, improvement in EBITDA margins and lower interest expenses in our estimates and expect RKL's PAT to grow at 34% CAGR in FY18-20E.

- Based on FY19E/FY20E revised EPS of Rs 13.5/16.6, the stock is trading at PE of 29.9/24.2x. We maintain Accumulate rating on the stock with revised target price of Rs 449 (vs Rs 421 earlier).

Shares of RADICO KHAITAN LTD. was last trading in BSE at Rs.423.6 as compared to the previous close of Rs. 403.45. The total number of shares traded during the day was 100224 in over 1669 trades.

The stock hit an intraday high of Rs. 423.6 and intraday low of 405. The net turnover during the day was Rs. 42173974.

Source : Equity Bulls

Keywords