Radico Khaitan (Q3 FY14)

India Infoline News Service | Mumbai |

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%

CMP Rs157, Target Rs150, Downside 4.2%
  • 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 

  • 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)

  • 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) 

Results table
(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
Source: Company, India Infoline Research

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
Source: Company, India Infoline Research

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
Source: Company, India Infoline Research

***Note: This is a NSE Chart

 

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