Radico Khaitan (RKL) is a well-known player in the alcoholic beverages industry, with a focus on premiumization and a strong track record of growth. According to a recent analyst report, the stock is currently trading at ₹2,590.75, with a target price of ₹2,996. The report reiterates a Buy recommendation for RKL, citing several factors that could drive the company’s growth in the coming years.
One key driver of growth for RKL is its focus on premiumization in the P&A category, which is expected to drive over 15% volume growth in FY25. The company’s strategy of launching products in the premium/luxury segment and targeting key markets is expected to help it gain market share and outpace the industry. Additionally, the report mentions that the regular category is expected to deliver mid-single-digit volume growth.
In terms of financial performance, the report forecasts that RKL will achieve targets of late-teens operating profit margin in three years. Revenue and profit after tax (PAT) are expected to post an 18% and 39% compound annual growth rate (CAGR) respectively over FY24-27. The report also highlights the company’s strong earnings growth and debt reduction, which are expected to boost its return profile in the coming years.
One of the key risks mentioned in the report is slow expansion in operating profit margin due to changes in liquor policies in key states, increase in excise rates, or volatility in raw material prices. However, the report remains optimistic about RKL’s prospects, citing its focus on premiumization, support of backward integration, and consistent improvement in profitability and cash flows in the coming years.
Overall, the report paints a positive picture of Radico Khaitan’s growth prospects and recommends a Buy on the stock. Investors looking to capitalize on the company’s strategies in the alcoholic beverages industry may want to consider adding RKL to their portfolio for potential long-term growth.
