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Radico Khaitan - Company Update - ICICI Securities
Posted On : 2020-07-25 11:07:34( TIMEZONE : IST )
Radico Khaitan reported strong margins in Q1FY21 in spite of a decline in revenues. Net revenues for Q1FY21 declined 34% YoY to Rs. 409 crore due to 43% decline in IMFL volumes to 3.54 million cases. Prestige and above segment volumes declined 47% while regular segment volumes declined 41% YoY. Gross margin increased 660 bps YoY to 54.6%.In spite of negative operating leverage, the company reported a 230 bps YoY improvement in EBITDA margin to 18.4%, which restricted the decline in EBITDA to 25%. Consequently, PAT declined 20% YoY to Rs. 44 crore owing to lower tax rate (24%in Q1FY21 vs. 34% in Q1FY20).
Valuation & Outlook
In a tough market scenario, Radico continues to outperform peers. For Q1FY21, the management indicated industry volumes were down more than 50% due to lockdown in April, May, whereas Radico volumes fell 44%. The company's premiumisation trend continued with Prestige & above share rising to 29% in FY20 from 28.3% in FY19 and over the medium to longer term the company is planning to introduce premium products. The company has constantly reduced debt from Rs. 950 crore in FY16 to Rs. 382 crore in FY20, enabling it to report higher profitability over the last few years. In Q1FY21, RKL further reduced debt by ~ Rs. 120 crore due to strong overdue receivable collection. With continued focus on brand development, newer premium IMFL launches and strong distribution network built over the years, RKL is poised to enhance its financial performance. We maintain our BUY rating on the stock with a revised target price of Rs. 460/share (~19x FY22E EPS).
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Radico_CoUpdate_Jul20.pdf
Shares of RADICO KHAITAN LTD. was last trading in BSE at Rs.395 as compared to the previous close of Rs. 397.1. The total number of shares traded during the day was 43553 in over 2177 trades.
The stock hit an intraday high of Rs. 400 and intraday low of 384. The net turnover during the day was Rs. 17093506.
