Radico Khaitan (Q3 FY13)

India Infoline News Service | Mumbai |

Radico Khaitan reported robust premium brands growth of ~20% yoy with Magic Moments and Morpheus brandy posting ~18% & 31% yoy rise in volumes respectively while overall volumes grew 6.5% yoy to 4.8mn cases

CMP Rs145, Target Rs162, Upside 11.7%

  • Radico Khaitan reported robust premium brands growth of ~20% yoy with Magic Moments and Morpheus brandy posting ~18% & 31% yoy rise in volumes respectively while overall volumes grew 6.5% yoy to 4.8mn cases; Q3 gross sales up 33% yoy but net revenues up 8% yoy impacted by higher excise rate (55% vs ~46% in Q3 FY12)

  • Premium brands as % of total brands continued to rise with Q3 share at 17.1% compared to 15.2% a year ago and 16% in Q2; the company also received 10% price hike in key state of AP towards the end of Q3; another large South Indian state too has proposed price rise of 8-10% from April 1 which would further drive revenue growth in the next few quarters 

  • YoY EBIDTA margin improved to 15.4% but declined sequentially by 118bps due to Rs2.7/lt rise in ENA costs during the quarter as well as planned maintenance shut down at Rampur plant

  • Although reported PAT declined yoy & qoq, it included Rs37mn in FX loss (FX loss of Rs65mn for 9m FY13) and higher effective tax rate of 34% (+12ppts yoy); 9m FY13 net debt stood at Rs7.2bn or ~3.6x FY13E EBIDTA 

  • Robust growth in premium brands along with price hikes is expected to drive revenue/EBIDTA growth in FY14; we introduce FY15 estimates and retain BUY for a revised 9-mth target of Rs162 (earlier Rs145) 

Results table
(Rs m) Q3 FY13 Q2 FY13 % qoq % yoy 9m FY13 % yoy
Net sales 3,260 2,970 9.8 8.1 9,269 7.8
Raw materials (1,466) (1,234) 18.9 18.9 (3,836) 10.6
Purchase of traded goods (155) (112) 38.2 (51.0) (405) (51.0)
Staff costs (204) (196) 3.7 12.3 (587) 11.5
Selling & Distribution (559) (527) 6.1 4.9 (1,772) 21.0
Other expenditure (375) (410) (8.4) 22.2 (1,153) 15.9
Operating profit 501 491 1.9 12.2 1,516 15.0
OPM (%) 15.4 16.5 (118) bps 56 bps 16.4 103 bps
Depreciation (90) (85) 5.9 16.1 (265) 17.8
Interest (216) (159) 35.8 82.4 (586) 38.1
Other income 85 84 1.1 57.4 230 67.3
PBT 279 331 (15.6) (8.2) 896 11.0
Tax (95) (110) (13.6) 41.8 (280) 30.2
Effective tax rate (%) 34.0 33.3 77 bps 1,201bps 31.3 462 bps
PAT 184 221 (16.6) (22.4) 616 4.0
PAT margin (%) 5.6 7.4 (178) bps (221) bps 6.6 (24) bps
Source: Company, India Infoline Research

Volume highlights
Vols (mn cases) Q3 FY13 Q2 FY13 % qoq % yoy 9m FY13 % yoy
Magic Moments 0.68 0.60 13.0 17.9 2.01 17.5
Morpheus Brandy 0.15 0.12 16.9 30.6 0.37 37.5
Premium brands 0.82 0.73 13.7 19.9 2.38 20.2
Other main line brands 2.74 2.62 4.6 6.4 8.34 7.0
Total main line brands 3.56 3.34 6.6 9.2 10.73 9.7
Other brands 1.26 1.15 9.0 (0.5) 3.73 1.7
Total
 

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