Anand Rathi's research report on Radico Khaitan
Outpacing its peers, Radico Khaitan had yet another healthy quarter. The drop in gross margin q/q was largely due to a weaker mix. The trend should improve in coming quarters with easing of restrictions and improvement in the Prestige & Above (P&A) category (also seen in Jul). We expect healthy sales/EBITDA CAGRs (14%/17%) over FY21-23. Superior execution, market-share gains, healthy new launch pipeline in P&A in H2 FY22, strong balance sheet and likely improved return profile offer sound assurance. We expect the discount to United Spirits to reduce, and raise our target multiple to 35x FY23e earnings (a ~20% discount to UNSP, earlier 27x).
Outlook
We maintain our Buy rating, with a revised target price of Rs1,009 (earlier Rs721).
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