Views on Radico Khaitan 2QFY2016 Results: Angel Broking

Views of Mr. Amarjeet Maurya (Sr. Research Analyst - Mid Caps, Angel Broking) on Radico Khaitan 2QFY2016 Results:

"Radico Khaitan's 2QFY2016 results outperformed our estimates. The company's top-line grew by ~2% yoy to ~Rs370cr (our estimates was of around Rs364cr), mainly due to growth in prestige and above products segment. On the operating front, the company reported margin expansion (up by 174bp yoy to 13.6%), primarily on account of lower selling & distribution expenses and other costs. The reported net profit grew by 25% yoy to ~Rs19cr (our estimates was of around Rs15cr) on account of strong operating performance and lower interest cost (in FY2015 the company repaid a significant amount of its debt; further debt reduction is also on the cards) and lower taxes.

Further, the company has not performed well in the last two years due to increasing raw material costs (ENA is a key raw material) and with it not receiving significant price hikes from various states. We expect the company to perform well going forward in anticipation of easing material costs and on expectation of better price hikes. This would result in an overall improvement in the operating margin of the company. We currently have a positive view on Radico Khaitan."

Source : Equity Bulls

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