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Radico Khaitan (RDCK) reported a strong 1QFY26 performance, with Revenue/EBITDA/PAT rising by 32%/56%/84% YoY, respectively. This robust growth was driven by stellar performance in the Prestige & Above (P&A) segment, a sharp recovery in the Regular segment, and strong market share gains in Andhra Pradesh. P&A brands posted 41% volume growth and 43% value growth, while Regular brands surged 52% in volume and 48% in value, aided by low base, state-level issue resolutions, and route-to-market changes. Premiumization, strong brand execution, and operating leverage drove profitability, with margins expected to expand sustainably. We reiterate a BUY rating with a target price of INR 3,084, based on a PE of 60x Jun'27E EPS.

P&A Brands Fuelling Broad-Based Growth::

RDCK's revenue grew 32% YoY to INR 1506 Crs driven by a 37% increase in total volume. P&A volumes rose 41% YoY to 3.8m cases, while Regular segment volumes jumped 52% to 5.4m cases. Excluding Andhra Pradesh, total volume growth was 12%, with P&A at 20%. Value growth across P&A and Regular stood at 43% and 48%, respectively

The non-IMFL business grew modestly by 12% due to lower bulk alcohol sales, though it maintained a healthy margin profile of 6.5%-7%. RDCK's aggressive market expansion and premium portfolio push, especially in Andhra Pradesh (market share up from 10% to 28% YoY), drove strong volume traction.

Luxury and semi-luxury brands saw 50% value growth YoY, led by Royal Ranthambore's 90% revenue surge. The company is on track to achieve its INR 500 Crs luxury/semi-luxury revenue target for FY26.

Margin Expansion Gaining Momentum:

Gross margin expanded 150bps YoY to 43%, driven by product mix improvements and stable raw material (ENA and grain) costs. EBITDA margin rose 230bps YoY to 15.4%, supported by premiumization and operating leverage

While employee costs rose 10% and S&D expenses grew 48% YoY, operational efficiency helped drive profitability. A one-time exceptional item of 69.9 Crs was settled for property tax claims in Rampur, not impacting operating metrics.

Management revised annual margin expansion guidance upward to 125-150bps (vs. earlier 100bps), targeting high-teen EBITDA margins by FY28.

Outlook & Valuation: RDCK's strong performance in high-growth segments like P&A and luxury portfolios validates its brand-centric strategy. With expanding market share, rising consumer demand for premium spirits, and strategic product launches (e.g., Morpheus Super Premium Whiskey, Spirit of Kashmir vodka), RDCK is well-placed for sustainable growth. We maintain a BUY rating with a target price of INR 3,084, based on 60x Jun'27E EPS.

Other Highlights:

Debt Reduction:

RDCK reduced net debt by INR 164 Crs since Mar'25, driven by strong cash flows and better working capital management. Capex of INR 1,50-160 Crs annually over the next two years will focus on malt infra and brand development. The company expects to be near debt-free by FY27.

UK-India FTA Boost: Reduced Scotch import duties (from 150% to 75%, tapering to 40% over 10 years) enhance cost advantages in premium blends. Scotch imports expected to be INR 250 Crs in FY26 and cross INR 400 Crs in 3 years.

Geographic Highlights: In Andhra Pradesh, market share surged to 28% (from 10% in 1HFY25). Karnataka saw premium brand share rise from 4% to 15% YoY. Maharashtra contributed 4-5% of volumes; the company expects minimal impact from duty hikes.

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