Radico Khaitan rallies 6%, hits record high; Motilal Oswal sees more upside

Business Standard

2 days ago

Share price of Radico Khaitan today
Share price of Radico Khaitan, a leading Indian Made Foreign Liquor (IMFL) company, rallied 6 per cent to hit a new high of ₹2,701.80 on the BSE in Tuesday's intra-day trade in an otherwise weak market. The stock price of this breweries & distilleries company surpassed its previous high of ₹2,666 touched on May 7, 2025.
In the past one year, the stock has outperformed the market by surging 65 per cent, as compared to 6 per cent rise in the BSE Sensex.
At 11:47 AM; Radico Khaitan was quoting 4.4 per cent higher at ₹2,659.15, as against 0.54 per cent decline in the benchmark index. The average trading volumes at the counter jumped multiple-fold, with a combined 830,000 equity shares changing hands on the NSE and BSE.
The first quarter of FY26 marks an exciting milestone as Radico prepares to introduce two luxury brands - projects that have been under development for two years. These launches represent a major leap in Radico Khaitan's premiumization journey, reinforcing our confidence that the best is yet to come, the management said in March 2025 quarter earnings conference call.
Looking ahead, the management said the company is poised for a strong double-digit growth in the Prestige & Above (P&A) category, enhanced profitability and a persistent focus on cash flow generation, all driving long-term value creation for the company's shareholders.
The recent route-to-market (RTM) changes in Andhra Pradesh have progressed well, promoting stability and predictability in the regulatory environment. As a result, the company have seen strong traction for its brand portfolio and gained market share from 10 per cent in the first half to over 17 per cent in Q3 and 23 per cent in Q4FY25, which is highest in the industry.
The management is optimistic that the pricing scenario for ENA and grains will remain stable going forward during FY26. Going forward, the company's focus will be on driving profitable growth along with cash flow generation, and more efficient working capital management, resulting in debt reduction.
Motilal Oswal Financial Services view on Radico Khaitan
Consumer acceptance for its premium brands over the years reflects Radico's long term brand upgrade story. Radico can further capitalize on this success by adding more brands to fill the white spaces to attract consumer segments that have higher volumes. Radico holds ~8 per cent share in the P&A category in the IMFL industry.
For Radico, vodka accounts for ~50 per cent of its P&A portfolio, with an >80 per cent share in the P&A vodka industry. Besides, the company has significantly scaled up its P&A whiskey portfolio (contributes ~5mn cases), though from the industry point of view, it is still small with a 3 per cent share. Here, Motilal Oswal Financial Services (MOFSL) sees a good opportunity for Radico and it gives us confidence that the company can sustain its double-digit volume growth in P&A in the medium term.
According to brokerage firm Radico has been one of the best-performing stocks among consumer names, with 25x return over the last 10 years and 8x return over the last five years. The valuation multiple has seen a notable re-rating over the last five years, with consistent outperformance of its P&A portfolio. However, MOFSL still believes that Radico will deliver strong earnings growth over the next 3-5 years considering the opportunity it has to scale up its P&A portfolio in the industry.
'We believe this portfolio expansion will help Radico expand its target user base and improve its trade confidence on execution, which increases the acceptance level for new products. We estimate 16 per cent revenue compounded annual growth rate (CAGR) during FY25-28E and EBITDA margin of 16.2 per cent by FY28 (similar to FY19). We believe a ~30 per cent EPS CAGR is good enough for sustaining rich valuations,' the brokerage firm said with value Radico at 60x P/E on June 2027 EPS to derive a target price of ₹3,000.
About Radico Khaitan
Radico Khaitan is among the oldest and one of the largest manufacturers of IMFL in India. In 1998 the company started its own brands with the introduction of 8PM Whisky. Radico Khaitan is one of the few companies in India to have developed its entire brand portfolio organically.
The company's brand portfolio includes Rampur Indian Single Malt Whiskies, Sangam World Malt Whisky, Spirit of Victory 1999 Pure Malt Whisky, Jaisalmer Indian Craft Gin, Royal Ranthambore Heritage Collection Royal Crafted Whisky, Happiness in a Bottle: A Happily Crafted Gin, Morpheus and Morpheus Blue Brandy, Magic Moments Vodka, Magic Moments Remix Pink Vodka, Magic Moments Dazzle Vodka (Gold & Silver), Magic Moments Verve Vodka, 1965 The Spirit of Victory Premium XXX Rum and Lemon Dash Premium Flavored Rum, After Dark Whisky, 8PM Premium Black Whisky, 8PM Whisky, Contessa Rum and Old Admiral Brandy.
Radico Khaitan is also one of the largest providers of branded IMFL to the Canteen Stores Department (CSD), which has significant business barriers to entry. The Company has distilleries situated in Rampur, Sitapur and Aurangabad, Maharashtra which is a 36 per cent joint venture.
The company has a total owned capacity of 320 million litres and operates 43 bottling units (5 owned, 29 contract and 9 royalty bottling units). It is also one of the largest exporters of Alcoholic beverages from India, with brands available in over 102 countries.