Buy Radico Khaitan Ltd for the Target Rs.3,950 by Choice Institutional Equities
Key Conference Call Highlights
Financial Performance
* FY26 marked a step-change in scale, with net revenue exceeding INR 60 Bn and EBITDA crossing INR 10 Bn for the first time, reflecting the benefits of premiumization and operating leverage
* On the margin front, Q4 EBITDA margin reached a record 18.9% (+531 bps YoY), supported by a 453-bps expansion in gross margin (to 48.0%), driven by a favourable product mix and benign input cost
* Importantly, these gains translated into operating leverage, as previous investments in the premium portfolio began to scale up, leading to improved return ratios and profitability
Operational Highlights: P&A and Luxury Momentum
* Growth remained premium-led, with the P&A segment delivering 28% volume growth in Q4 and now accounting for nearly half of own-brand volumes
* In parallel, the Luxury portfolio scaled up to INR 4.7 Bn in FY26, supported by strong brand traction: Royal Ranthambore (>50% growth) and Magic Moments (21% volume growth to 8.6 Mn cases) reinforcing category leadership
* From a brand-building perspective, digital reach expanded significantly (900 Mn impressions), supporting premium traction without margin dilution
Strategic Initiatives & Future Growth Levers
* Looking ahead, RDCK is deepening its premium playbook, with a focus on category expansion and brand-led growth
* The planned Tequila launch in FY27E, alongside continued innovation in the Magic Moments portfolio, is aimed at capturing the white spirits opportunity ? Simultaneously, the company is scaling up its on-trade strategy, with 2,000+ brand advocacy sessions planned to enhance premium visibility and consumer engagement
* From a capital allocation standpoint, management reiterated a “build over buy” approach, prioritising organic expansion
* This is supported by a strengthening balance sheet, with INR 3.3 Bn net debt reduction, keeping the company on track to become net debt-free in FY27E
Outlook & Guidance
* For FY27E, management remains confident of sustaining momentum, guiding for ~20% P&A volume growth and ~25% growth in the Luxury portfolio
* Despite potential external risks (including West Asia-led supply chain volatility), the company expects to deliver 120–125 bps EBITDA margin expansion, supported by premiumization and operating leverage
* Further, the introduction of a minimum 20% dividend payout policy reflects confidence in cashflow generation and capital discipline
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SEBI Registration no.: INZ 000160131
