Radico Khaitan has consistently delivered b returns to its investors. Over the past year, the stock has yielded over 25%, while the past five years have seen a growth of approximately 150%.
Radico Khaitan: The demand for premium brands in the Indian alcoholic beverage market is steadily increasing, and Radico Khaitan's b presence in this segment is making it an increasingly attractive option for investors. Reputable brokerage firms like Motilal Oswal have projected a potential upside of 15% for the company. Market experts believe this stock can offer superior returns to long-term investors.
Radico Khaitan's Market Penetration
Radico Khaitan is a veteran and robust player in the Indian alcoholic beverage industry, having earned investor confidence over the years through product quality and strategic expansion. The company's presence is particularly noteworthy in the premium segment of Indian Made Foreign Liquor (IMFL). It holds approximately 8% market share in the Prestige & Above category. Its market share in the vodka segment exceeds 80%, clearly establishing this segment as a major revenue generator for Radico.
Impressive Returns Over the Years
Over the past ten years, Radico Khaitan has delivered approximately 25 times the return to its shareholders, while the five-year figure stands at eight times. This performance significantly outpaces giants like United Spirits, United Breweries, and Allied Blenders. This signifies not only the strengthening of the company's business but also the substantial gains delivered to investors.
Aggressive Expansion in the Premium Segment
In recent years, Radico Khaitan has added several luxury brands to its portfolio. These include names like Rampur, Ranthambore, and Jaisalmer, which are strengthening the company's brand recognition not only in the Indian market but also globally. The popularity and increasing demand for these brands are rapidly expanding the company's presence in the premium segment.
Increased Retail and On-Premise Presence
Radico recently increased its retail touchpoints from 75,000 to 100,000, significantly expanding its on-the-ground presence and consumer reach. Similarly, the number of on-premise locations has increased from 8,000 to 10,000, boosting the availability of Radico's products in hotels, restaurants, and bars.
Financial Performance and Margins
From fiscal year 2019 to 2025, the company's total revenue witnessed a compound annual growth rate (CAGR) of 15%, while income from premium and luxury brands grew at a rate of 20%. However, rising prices of raw materials such as glass and extra neutral alcohol (ENA) have impacted margins. Margins have decreased from 17% to 14%. The company is now working on increasing in-house production to control costs, which is expected to improve margins in the future.
Policy Benefits and Government's Role
Radico Khaitan is also benefiting from government policies in certain states. The company's revenue share has consistently increased in states like Uttar Pradesh, Andhra Pradesh, Maharashtra, Telangana, and Tamil Nadu. In Andhra Pradesh, in particular, its market share rose from 10% to 23% in the fourth quarter of fiscal year 2025.
Furthermore, a potential free trade agreement between India and the United Kingdom could significantly benefit the company. Following this agreement, import duty on imported spirits like whiskey and gin could decrease from 150% to 75%, potentially reaching 40% within the next 10 years. This would reduce the production cost of the company's premium brands and enhance international competitiveness.
Motilal Oswal's Report and Valuation
In its report, Motilal Oswal has set a target price of ₹7,000 for Radico Khaitan's stock. This is approximately 15% higher than the current level. This valuation is based on a 60 times Price-to-Earnings (PE) ratio on the company's projected earnings per share (EPS) for fiscal year 2027. This indicates the brokerage house's b confidence in the company's future performance.
