Radico Khaitan Ltd Research ReportCo.Update

Focus on premiumisation aiding margin profile… Radico Khaitan (RKL) reported volume growth of ~1% YoY in Q3FY21 compared to industry de-growth of 1%. Prestige and above segment continued to perform well with volume growth of 5% YoY. RKL reported revenue growth of 5.6% YoY to | 684 crore. EBITDA grew 21% YoY to | 124.6 crore driven by improved margin profile. EBITDA margin expanded 235 bps from 15.8% to 18.1% due to gross margin improvement and cost rationalisation. Lower Interest cost and higher other income enabled the company to report 45% YoY growth in net profit to | 80.5 crore. Strong P&A performance, buoyant exports aiding growth RKL has been able to remain on a positive volume growth trajectory mainly driven by 5% volume growth in its Prestige and above brand volumes. The regular segment volumes declined in line with industry trend by 1% YoY. The company’s export business has shown strong traction in YTD FY21 with growth of ~ 80% YoY. Currently, it contributes 6% of IMFL volumes and 7.5% of IMFL revenues. Both P&A & exports have better margins than the regular segment. The company is continuously focusing on premiumisation of its product portfolio (P&A segment volumes share increased 130 bps YoY to 30.7% in Q3FY21). This has enabled it to improve its margin profile. RKL has benefitted from improved price realisation due to a better product mix, strong exports and price increases in certain states.