Radico Khaitan (Q3 FY14)
Radico reported ~20% rise in revenues as prestige and above brands' vols grew 21.2% yoy and their share of portfolio improved 218bps yoy to 19.3%
Feb 15, 2014 12:02 IST India Infoline News Service
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Radico reported ~20% rise in revenues as prestige and above brands' vols grew 21.2% yoy and their share of portfolio improved 218bps yoy to 19.3%; IMFL sales volumes rose 8.2% yoy with value growth of 15.5% yoy
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Higher selling and marketing costs to support flavours/upgraded versions of newly launched brands led to margin decline of 36bps yoy cushioned to an extent by lower stock purchases; ENA costs increased 3.6% yoy (+Rs1.7/ltr)
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Higher interest costs were offset by lower tax rate which led to ~17% yoy rise in PAT; overall we believe new launches, price increases taken earlier in the year and increasing share of prestige brands augur well but at the same time input cost pressures are unlikely to correct significantly; tweak our FY14/15 EPS estimates and in lieu of recent stock up move, downgrade to Market Performer with revised 9-12 mth target of Rs150 (earlier Rs145)
| (Rs m) | Q3 FY14 | Q3 FY13 | % yoy | 9m FY14 | 9m FY13 | % yoy |
| Gross sales | 8,096 | 7,085 | 14.3 | 23,022 | 17,846 | 29.0 |
| Excise duty | (4,302) | (3,909) | 10.0 | (12,326) | (8,881) | 38.8 |
| Excise rate (%) | 53.1 | 55.2 | (204) bps | 53.5 | 49.8 | 378 bps |
| Net sales | 3,794 | 3,176 | 19.5 | 10,695 | 8,965 | 19.3 |
| Other op income | 114 | 85 | 35.4 | 308 | 304 | 1.3 |
| Total sales | 3,909 | 3,260 | 19.9 | 11,003 | 9,269 | 18.7 |
| Raw materials | (1,780) | (1,466) | 21.4 | (4,976) | (3,836) | 29.7 |
| Purchase of traded goods | (52) | (155) | (66.3) | (198) | (405) | (51.3) |
| Staff costs | (258) | (204) | 26.8 | (695) | (587) | 18.5 |
| Selling & Distribution | (778) | (559) | 39.1 | (2,156) | (1,772) | 21.7 |
| Other expenditure | (501) | (414) | 20.9 | (1,452) | (1,220) | 19.0 |
| Operating profit | 540 | 462 | 16.8 | 1,527 | 1,449 | 5.4 |
| OPM (%) | 13.8 | 14.2 | (36) bps | 13.9 | 15.6 | (176) bps |
| Depreciation | (99) | (90) | 9.4 | (290) | (265) | 9.4 |
| Interest | (222) | (178) | 24.8 | (625) | (518) | 20.5 |
| Other income | 90 | 85 | 6.7 | 264 | 230 | 14.5 |
| PBT | 310 | 279 | 11.0 | 876 | 896 | (2.2) |
| Tax | (94) | (95) | (0.7) | (262) | (280) | (6.4) |
| Effective tax rate (%) | 30.5 | 34.1 | (361) bps | 29.9 | 31.3 | (132) bps |
| PAT | 215 | 184 | 17.1 | 614 | 616 | (0.3) |
| PAT margin (%) | 2.7 | 2.6 | 6 bps | 2.7 | 3.4 | (78) bps |
Volume highlights
| Vols (mn cases) | Q3 FY14 | Q3 FY13 | % yoy | 9m FY14 | % yoy |
| Prestige & above brands | 1.0 | 0.8 | 21.2 | 2.9 | 21.7 |
| Regular & others | 4.2 | 4.0 | 4.7 | 12.8 | 5.6 |
| Total | 5.2 | 4.8 | 7.6 | 15.7 | 8.2 |
| Prestige & Above % of total | 19.3 | 17.1 | 218 bps | 18.5 | 205 bps |
Financial summary
| Y/e 31 March (Rs m) | FY13 | FY14E | FY15E | FY16E |
| Revenues | 12,584 | 14,455 | 15,897 | 17,677 |
| yoy growth (%) | 10.0 | 14.9 | 10.0 | 11.2 |
| Operating profit | 1,842 | 2,038 | 2,337 | 2,705 |
| OPM (%) | 14.6 | 14.1 | 14.7 | 15.3 |
| Reported PAT | 773 | 808 | 988 | 1,227 |
| yoy growth (%) | 21.4 | 4.6 | 22.2 | 24.3 |
| EPS (Rs) | 5.8 | 6.1 | 7.5 | 9.3 |
| P/E (x) | 26.9 | 25.7 | 21.0 | 16.9 |
| P/BV (x) | 2.9 | 2.6 | 2.4 | 2.1 |
| EV/EBITDA (x) | 15.1 | 14.1 | 12.4 | 10.8 |
| Debt/Equity (x) | 1.0 | 1.0 | 0.9 | 0.8 |
| ROE (%) | 10.9 | 10.6 | 11.8 | 13.1 |
| ROCE (%) | 12.5 | 12.5 | 13.3 | 14.4 |
