Sharekhan has given Buy recommendation for Radico Khaitan with a target price of Rs. 1250 in its research report issued on Nov 03, 2021
Sharekhan’s research report on Radico Khaitan
Radico Khaitan (RKL) posted a strong volume-led revenue performance during the quarter but higher raw material prices affected the company’s profitability in Q2FY2022. Premium brands registered a strong volume growth of 18%. Demand environment in key markets remained strong. The momentum is expected to sustain in the quarters ahead with consumers shifting to premium brands. The company launched two new products in premium whisky and vodka space to maintain momentum. Margins are likely to stay stressed in the near term. The company targets to achieve margins in the high teens as P&A contribution is expected to increase to 35% from current 30%.
We maintain a Buy recommendation on RKL with an unchanged PT of Rs. 1,250. Better earnings visibility, a strong balance sheet with high cash generation ability and robust return profile makes it good pick in domestic liquor space.