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Hidden Gem - Radico Khaitan (Target Price Rs 3540)

ICICIdirect Research 10 Oct 2025 DISCLAIMER

Radico Khaitan (RKL) is one of the recognised IMFL company in India with portfolio of 8 millionaire brands. It has one of the largest liquor manufacturers in India with a capacity of 321mn litres p.a.
Radico Khaitan has strong portfolio of 8 millionaire brands and various luxury and premium offering across various categories and segments (Regular to Luxury). Magic Moments, one of its brands is India’s leading Vodka with 60% market share and has crossed 7mn cases volume in FY25 growing from 3mn cases in FY23. Its whisky brand, 8PM whisky has crossed 10mn cases in FY25 while After Dark whisky, the latest millionaire brand has crossed 1.9mn cases in FY25 growing at 100% YoY. In Semi-luxury segment, The Royal Ranthambhore Heritage Collection is growing at 50%+ volumes. The company has a strong brand portfolio and are scaling up on strong traction.
Premiumisation remains the core-strategy of RKL. Prestige & Above (P&A) segment volume contribution has improved to 46% in FY25 from 29% in FY21 which shows focused approach in the premiumisation journey by the company. P&A segment revenues witnessed 21% YoY growth in FY25 to Rs.2340cr aided by mid-teens volumes growth of 15%. Since FY19, the P&A portfolio has grown at CAGR of 13% reflecting sustained momentum in the premiumisation growth journey of the company.
Additionally, Radico’s luxury spirit brands are witnessing robust growth of 50%+ due to stronger traction in the new launches. Key new launches were Rampur Asava, Sangam World Malt, and the Jaisalmer Indian Craft Gin – Gold Edition. Luxury segment contributed Rs.350cr to the total revenues of FY25. With sustained growth momentum the company is confident of achieving Rs.500cr+ revenues in the luxury portfolio in FY26 which will further aid the premiumisation journey.
Further, the company has undertaken backward integration measures such as modernisation of distillation infrastructure such as the 350 KLPD grain-based distillery in Sitapur, packaging and production capabilities with dedicated printing facility for Magic Moments in Aurangabad and expanded PET bottle facility in South India.
Driven by the premiumisation and the backward integration measures, EBITDA margins have improved by 160bps YoY in FY25 to 13.9% in FY25. Further, the management expects 100bps improvement in margins in FY26.
With the premiumisation measures, backward integration and upcoming UK India FTA taking effect, RKL’s revenues and PAT are expected to grow at CAGR of 17% and 35% over FY25-28E to Rs.7779.1cr and Rs.854.3cr respectively. We expect the EBITDA margins to further improve by 280bps to 16.7% in FY28. Also, the strong profitability, stable working capital and no major upcoming capex would result in reduction of consolidated debt further improving RoE and RoCE to improve by 18% and 23% in FY28.
We recommend Buy with a price target of Rs.3,540.

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