Radico Khaitan Ltd
Breweries & Distilleries
FV – Rs 2; 52wks H/L –130.9/78.10; TTQ – 6 K; CMP – Rs 89 (As On May 13th 2016; 11.00);
Market Cap – Rs 1138.83 Crs
Consolidated Financials and Valuations for FY16 (Amt in Rs Crs unless specified)
Equity Capital |
Net worth |
Long Term Debt | Total Sales |
PAT | BV (Rs) |
EPS (Rs) |
P/E |
Industry P/E |
P/BV |
Promoter’s Stake |
Beta |
| 26.61 | 905 | 198 | 1543 | 76.89 | 68 | 5.78 | 15.4 | 54.14 | 1.3 | 40.46 | 0.38 |
Consolidated Financials and Valuations for Q4 FY16
Equity Capital |
Net worth |
Long Term Debt | Total Sales |
PAT | BV (Rs) |
TTM EPS (Rs) |
TTM P/E |
Industry P/E |
P/BV |
Promoter’s Stake |
Beta |
| 26.61 | 905 | 198 | 377 | 14.77 | 68 | 6.33 | 14.06 | 54.14 | 1.3 | 40.46 | 0.38 |
Valuation Parameters:
- Long Term Debt to Equity – 0.22
- ROE % – 8.5
- Market Cap/Sales – 0.7
The company has roped in celebrity Hrithik Roshan as its brand ambassador.
Key Updates:
- In the IMFL segment, more than 20% of the company’s volumes come from prestige and above products, which is a high margin business, and the balance volumes come from regular and others brands.
- Since the last eight years, the company’s prestige and above brands’ volume has reported a CAGR of ~23% and their share in the product mix has increased from 7.9% in FY2009 to 24% in FY2016.
- RKL has a strong sales and distribution network with a presence in retail and offtrade outlets in the relevant segments in different parts of India. Currently, the company is selling its products through over 45,000 retail outlets and over 5,000 on-premise outlets.
- The company exports to about 60 countries worldwide and has made a good presence in the international markets.
Bulk Deals:
| Deal Date | Client Name | Deal Type | Quantity | Price |
| 19-Jan-16 | Morgan Stanley Asia Singapore Pte | P | 1600000 | 108 |
| 19-Jan-16 | Ashish Dhawan | S | 2000000 | 108.01 |
| 26-Aug-15 | Morgan Stanley Asia Singapore Pte | P | 1460000 | 89.66 |
| 26-Aug-15 | Bajaj Allianz Life Insurance Co.Ltd | S | 1500000 | 89.67 |
During the quarter the Karnataka government gave a price increase (`35/case) to the company which would be effective from July 1, 2016 and would contribute towards margin improvement. Further, the government of Uttar Pradesh has reduced the excise duty on Indian made foreign liquor (IMFL) by 20-25% with effect from April 1, 2016, which is expected to result in an increase in IMFL sales volume in the state going forward.
These policy actions should significantly benefit the company as the two states account for ~20% of its volumes.
Overview:
- Radico Khaitan Ltd is an spirits company engaged in the manufacture of liquor.
- The company has three distilleries and one JV with total capacity of 150mn litres and 33 bottling units spread across the country.
- The company is one of the largest providers of branded IMFL to the Canteen Stores Department (CSD), which has significant entry barriers.
- RKL’s brands include After Dark Whisky, Magic Moments Vodka, Morpheus Brandy, Contessa Rum, Old Admiral Brandy and 8 PM.
- Its liquor business also includes rectified spirit and country liquor. Its alcohol products include rectified spirit, silent spirit, cane juice spirit, malt spirit, grain spirit and ethanol.
- The company’s PET division produces a range of PET bottles and jars for industries such as pharmaceutical, cosmetics, home and personal care, edible oil and confectionery.
Management:
- Lalit Khaitan – CMD
- Abhishek Khaitan – CEO
- Dilip Banthiya – CFO
Major Non-Promoter Holdings:
| Sr.No | Non – Promoters | No. of Shares held | % of shares held |
| 1 | Reliance Capital Trustee Company Ltd A/C Reliance Growth Fund | 12458871 | 9.36 |
| 2 | HSBC Global Investment Funds A/C Hsbc GIF Mauritius Ltd | 9980624 | 7.5 |
| 3 | Ashish Dhawan | 4934195 | 3.71 |
| 4 | Morgan Stanley (Singapore) Pte | 3676897 | 2.76 |
| 5 | SBI Small and Midcap Fund | 2890556 | 2.17 |
| 6 | BNP Paribas Arbitrage | 2660081 | 2 |
| 7 | TIMF Holdings | 2450000 | 1.84 |
| 8 | Birla Sun Life Trustee Company Pvt Ltd A/c Birla Sun Life Equity Fund | 2143079 | 1.61 |
| 9 | Acacia Partners LP | 1512000 | 1.14 |
| 10 | Polus Global Fund | 1455000 | 1.09 |
| Total | 44161303 | 33.19 |
Consolidated Financial Trends (In Rs. Crs) :
| Particulars | FY16 | FY15 | FY14 | FY13 | FY12 | FY11 |
| Equity Paid Up | 26.61 | 26.61 | 26.61 | 26.58 | 26.54 | 26.51 |
| Networth | 905 | 829 | 781 | 728 | 695 | 651 |
| Total Debt | 708 | 738 | 825 | 719 | 615 | 309 |
| Net Sales | 1543 | 1534 | 1488 | 1289 | 1165 | 957 |
| Other Income | 35 | 45 | 37 | 30 | 21 | 11 |
| PAT | 76.89 | 67.64 | 71.26 | 77.28 | 63.66 | 72.8 |
| Book Value (Rs) | 68 | 62 | 59 | 55 | 52 | 49 |
| EPS (Rs) | 5.78 | 5.08 | 5.36 | 5.81 | 4.80 | 5.49 |
The company has not performed well in the last two years due to increasing raw material costs (ENA is a key raw material) and with it not receiving significant price hikes from various states.
The company reported a net profit of 14.8cr on account of higher interest costs and taxes.
The company made repayment of 67.8 Crs during the year FY15.
(*ENA – Extra Neutral Alcohol)
Risks:
- Change in Legal Drinking Age.
- Change in Tax.
- Competition from International Markets and Forex rate Fluctuations.
- Changing Consumer Preferences.
- Increase in Raw Material Prices.
