Dolat Capital Market's research report on Radico Khaitan
Radico Khaitan (RDCK) Q3FY21 numbers were in-line and healthy. Revenue/EBIDTA/APAT grew by a healthy +5.6/21.5/30.9% YoY. UNSP’s performance was -3.6/-9.5/-11.1% YoY. RDCK’s outperformed UNSP by miles in 9MFY21 with revenue/EBITDA/APAT growth of - 6.4/+6.3/ +11.1% YoY vs. UNSP’s -18.2/-46.5/-59.7% YoY. Step-up in A&P spends (+37% YoY), launch of new variants and expansion of brands to new cities/states were other positives. Over the last three years, RDCK experienced robust volume growth, price increases, premiumisation, RM tailwinds, and thus de-leveraging. RDCK’s revenue/EBITDA/PAT grew at an impressive CAGR of 13/21/41% over FY17-20. Net debt declined from Rs 9.5bn in FY16, to Rs 2.55bn as of Dec-20. We remain constructive on RDCK story due to expansion in addressable opportunity in premium whisky, premiumisation, and deleveraging trajectory. RDCK is trading at attractive 21/18x FY22/23E EPS vs. 50/40x for UNSP. With continued superior performance, we believe this discount should narrow.
Outlook
Reiterate BUY with revised TP of Rs 625 @ 24x Dec-22E EPS (earlier Rs 593 @ 24x Sep-22E EPS). Our estimates remain unchanged. Increase in TP is on account of roll-forward.
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