05 Nov , 2021 By : Kanchan Joshi
Shares of Radico Khaitan have multibagger return this year so far with the stock surging over 130% in 2021 (year-to-date or YTD). From Rs436 per share level in November last year, the multibagger stock currently hovers around Rs1,052 apiece. Brokerage and research firm Emkay sees further upside on the stock as it has a Buy rating on the same.
Consistent outperformance in P&A, working capital improvement and debt reduction keep the brokerage positive on Radico Khaitan. Further re-opening/regulatory easing could drive upsides. The company reported a healthy performance, with 13% topline growth, outpacing industry growth of around 7%. P&A growth was stronger at 22%, with 18% volume growth.
“Management remains optimistic about delivering strong P&A growth ahead. The increasing success of innovations, strong core brands and new initiatives in the premium segments are likely to sustain the outperformance and market share gains in P&A," the note stated. It has maintained Buy rating on the stock with a revised target price of Rs1,170 (from Rs1,090 earlier).
With further expansion of the P&A portfolio and strong trends across core brands, management expects to sustain double-digit growth in P&A ahead.
“Margin pressure should be temporary. A price hike in non-IMFL is likely by Q1FY23. This, along with the strong mix improvement from P&A and cost efficiencies, should continue to drive margin gains in FY23-24E. Management is targeting EBITDA margin in the highteens in 2-3 years," Emkay added.
With rising success, Radico Khaitan's new launches are being scaled up. Jaisalmer craft gin has now been expanded to ten states. Recent launches aim to further expand its presence in the luxury segment. The company has launched Royal Ranthambore Whisky and Dazzle Vodka in UP and Maharashtra. These products will be rolled out across the other eight key states in H2.
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