Buy Radico Khaitan Ltd for the Target Rs.3,340 by Choice Broking Ltd
Well-established Portfolio Set to Drive Growth
Since its 2017 pivot, RDCK has launched 13 Prestige & Above (P&A) brands out of a 25+ brand portfolio, with 8 already achieving millionaire status. This has reshaped its mix, evident in FY25, with P&A and Popular volumes now at par, and P&A emerging as the key revenue driver at 48.2%, followed by Country Liquor – 30.5% and Popular – 20.3%. Led by accelerated Premium launches and 5 of its 8 Millionaire brands in the P&A segment; along with policy tailwinds in Telangana and Andhra Pradesh supporting growth in the Popular category, we believe RDCK is wellpositioned to deliver 23.3% and 22.6% sales CAGR in P&A and Popular segments, respectively, over FY25–28E.
Distribution Scale Positions RDCK Among the Market Leaders
RDCK has built a strong, future-ready distribution network with 1,00,000+ retail outlets, 10,000 on premise accounts, and a solid CSD presence, where key brands hold up to 16% market share. Backed by 300+ sales executives, and presence in 100+ countries, the company ensures deep market access. The distribution network is supported by 43 bottling units. In our view, this scale positions RDCK to deliver 18.5% Revenue CAGR by FY28E, aided by its distribution strength, and exports momentum.
Backward Integration Complete: Awaiting Margin Expansion
RDCK has completed a multi-year backward integration drive, scaling ENA capacity to 321Mn litres with new grain-based and dual-feed distilleries—ensuring supply security, cost stability, and consistent quality. Cost efficiencies from lighter packaging (1,450 MT glass, 3,100 MT paper saved in FY24) and local sourcing add to margin support. With major capex behind and annual spend normalising to INR 1Bn, free cash flows are set to improve. We believe this integrated platform will drive 320 bps margin expansion, over FY25-28, aided by better mix, FCF generation, and lower leverage.
Investment View
Driven by a rising premium mix, scaled distribution backbone and costefficient integration, we expect RDCK to deliver, Revenue / EBITDA / PAT CAGR of 18.5% / 26.9% / 39% over FY25–28E. We therefore initiate coverage with a BUY rating and a target price of INR 3,340 based on our DCF model. Our valuation implies a ~62.2x / 48.4x PE on FY27E / FY28E EPS.
Key Investment Risks
• Policy unpredictability, advertising restrictions, and intensifying of competition in the Scotch category could limit RDCK’s premium brand visibility and pricing power—posing risk to growth consistency and margin expansion.
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SEBI Registration no.: INZ 000160131
