Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  

| More

Radico Khaitan Ltd - Q2FY21 Result Update - YES Securities

Posted On: 2020-10-30 08:21:08

Market share gains and WC improvement continue unabated; poised for further re-rating

- Financial highlights - 4.6% volume growth, Prestige & Above 3.6% volume growth drove 10.5% net revenue growth, 90bps GM expansion and 180bps EBITDA margin expansion to 17% led by price increase in Telangana, better state & product mix, 24% reduction in A&P spends; PBT growth of 49.5%, further net debt reduction of 129cr in 1H given WC days reduction to 36 days led by aggressive overdue collections.

- MD commentary - Sharp recovery from 1Q but industry growth uneven across states, larger states like UP, Karnataka, Telangana have returned to growth trajectory in 2Q where Radico gained share, festive season to bring back normalcy in 2H, benign RM scenario with ENA prices declining 6.5% yoy and 2.5% qoq; focus on new brand development, cost rationalization and distribution ramp-up, recently launched Rampur Asava premium single malt.

- Margin outlook - Sequential decline of 550bps in GMs given the one-off revenue skew in 1Q towards high-margin states; sustainable target for GMs remains at 50-51%; 70% growth in exports (8-9% of sales) led to higher selling and distribution expenses and additional levy from UP govt; confident of reaching high-teens margins in next couple of years.

- Market share trends - Gained share across states especially UP, Telangana, Uttaranchal and Karnataka where sales has normalized; while market declined by 9%, Radico grew by 4.6% in volumes; Rajasthan (-20%), AP (-50%), Assam, Orissa, Maharashtra (-6.5%) have seen a decline. FY19/FY20/1HFY21 industry growth of 9%/0%/-9% and Radico growth of 11%/12%/4.6%.

- Online delivery - Some states have started but impact on sales is still negligible.

- Price increases - Couple of Southern states are considering a price increase in near term, but expect a significant increase only in FY22.

- Country liquor business - Present in only one state and operates as a separate order-driven business which does not impact IMFL business in any way.

- New launches - Had ramped up malt distillation capacity a few years ago, so continue to launch new variants of Rampur Single Malt.

- CSD business - Restrictions continue to remain stringent which has impacted sales (typically 9-10% of sales); hoping for normalization by 4QFY21; decline of 15-16% yoy in volume terms in 1H.

- Exports business - Export to 80-85 countries, most markets have better margins than domestic market given premium mix; planning to expand aggressively to leverage distribution network.

- Receivables management - Not too much of a worry given credit given mostly to state corporations which can delay but rarely default; NWC cycle down from 61 to 36 days given aggressive collection efforts.

- Capital allocation - Will increase dividend payouts/start buybacks after becoming debt-free; not looking at any acquisitions.

- Whisky strategy after Vodka success - Command 60% share in vodka category; crossed 10mn cases in 8PM; lined up 3-4 new premium and above launches in next 2-3 years.

- Ban on import of scotch - Great opportunity for Radico brands like Rampur and Jaisalmer.

- Valuation and view - The stock is currently trading at 28x TTM earnings which we believe deserves some re-rating given 6 quarters of continued market share gains coupled with margin and WC improvement. Success of new premium brands and significant ramp-up in exports can be further triggers for the stock going forward.

Shares of RADICO KHAITAN LTD. was last trading in BSE at Rs.438.4 as compared to the previous close of Rs. 446.6. The total number of shares traded during the day was 10459 in over 822 trades.

The stock hit an intraday high of Rs. 459 and intraday low of 431. The net turnover during the day was Rs. 4603787.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

Rollover Report for November 2020 - December 2020: Angel Broking

Initiating Coverage on Godrej Properties - The housing factory - HDFC Securities

Burger King IPO - Angel Broking

Rollover Analysis - Record foreign inflows pushes Nifty to 13k - YES Securities

Ceramic tiles industry - Market share gains sustain for top branded players - ICICI Securities

Gas sector - CGD: Competition to hit margins, volumes and lead to derating - ICICI Securities

Cement - Prices resilient in Q3; consensus upgrades to continue - ICICI Securities

Specialty chemicals - Price trend in Sep-20 - ICICI Securities

Timken India - Q2FY21 Company Update - ICICI Direct

Upgrade in target price of IDFC First Bank - Angel Broking

Laurus Labs stake acquisition in Richore Lifesciences - Angel Broking

Shares of Lakshmi Vilas Bank (LVB) suspended from trading - Angel Broking

Initiating Coverage on Sundram Fasteners - Fastening growth - HDFC Securities

Astral Poly Technik - Scalability to further improve with storage tanks foray - ICICI Securities

Vardhman Special Steel - Q2FY21 Company Update - ICICI Direct

Initiating Coverage - Advanced Enzyme Technologies - ICICI Direct

L&T - Secures Large Contract - Nov 25, 2020 - Angel Broking

Alembic Pharmaceuticals - Tentative Approval for JV - Angel Broking

Drug launch by Lupin - Tacrolimus Capsules - Angel Broking

Gujarat Gas - Nov 25, 2020 - Angel Broking

Metropolis Healthcare - Nov 25, 2020 - Angel Broking

NTPC - Showcase of strength & competitiveness - ICICI Securities

Telecom - Market Share TRACKER - Bharti is narrowing the gap on incremental market share vs RJio - ICICI Securities

Cochin Shipyard - Q2FY21 Result Update - ICICI Direct

Engineers India - Q2FY21 Result Update - ICICI Direct

Rupee - Nov 24, 2020 - Reliance Securities

FMCG Sector Update - Recovery unlocked; lower growth divergence - HDFC Securities

Engineers India - Consultancy segment outperformance - ICICI Securities

Engineers India - Q2 FY21 Result Update - YES SECURITIES

Motherson Sumi Systems - Company Update - Virtual Investor Conference - ICICI Direct

Mutual Fund Review - November, 2020 - ICICI Direct

Sadbhav Engineering - Q2FY21 Company Update - ICICI Direct

IRB Infrastructure - Q2FY21 Company Update - ICICI Direct

Vodafone Idea fund raising - Angel Broking

Rupee - Nov 23, 2020 - Reliance Securities

Crude Oil - Nov 23, 2020 - Reliance Securities

Q2FY21 Bank Result Quick Review - Angel Broking

Banks & NBFC's Sector Update Report - Yet another watershed moment? - HDFC Securities

Galaxy Surfactants - EBITDA/kg has an upside risk - ICICI Securities

Diagnostics - COVID-19 tests continue to trend higher - ICICI Securities

Banking & Financial Services - Sector Update - Nov 22, 2020 - ICICI Direct

Dalmia Bharat Sugar - Q2FY21 Company Update - ICICI Direct

Balkrishna Industries - Industry export growth momentum continues - ICICI Securities

Covid Recovery Pulse - Festive positivity continues in auto retails, E-way bill generation improves... - ICICI Direct

Quant Pick - Exide Industries - ICICI Direct

Shankara Building Products - Q2FY21 Company Update - ICICI Direct

Triveni Engineering - Q2FY21 Company Update - ICICI Direct

Initiating Coverage on Sudarshan Chemical - Leaping into the league of giants - HDFC Securities

Earnings Wrap Q2FY21: Earnings outperform, post Covid recovery picks up steam - ICICI Direct

Vodafone Idea Positive development beneficial for IDFC first bank - Angel Broking

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019