RADICO - Radico Khaitan Ltd. Share Price

In the Q2 FY26 earnings call, management of Radico Khaitan Limited expressed a strong outlook, highlighting a robust growth momentum supported by their premiumization strategy and disciplined execution. They reported a remarkable volume growth of 37.8% year-on-year, with the Prestige & Above segment achieving a 21.7% increase. Notable brand performances included Magic Moments Vodka with nearly 20% volume growth, and After Dark Whisky, which saw a stunning 115% growth year-on-year in the first half. Management reported that sales for After Dark exceeded 1.5 million cases in the first half of FY26.

Key forward-looking points include:

1. Continued Momentum: Management remains optimistic about delivering strong double-digit growth in the Prestige & Above category, enhanced profitability, and a focus on cash flow generation.

2. Market Share Gains: In Andhra Pradesh, market share surged from approximately 10% to over 30%. The company anticipates sustained growth in this market despite a normalization in the base.

3. Investment in Marketing: A&SP investments increased to 6.1% of IMFL revenue, with a continued allocation expected between 6% to 8% to support brand visibility and growth.

4. Financial Targets: Management is guiding for an increase in EBITDA margin by 150 basis points in the current fiscal and anticipates reaching late teens in margin improvement over the next two years.

5. Luxury Portfolio Growth: Management is on track to achieve a target of Rs.500 crores in revenue from their luxury and semi-luxury portfolio for FY26, driven by brands like Royal Ranthambore and Rampur Indian Single Malt.

Overall, Radico Khaitan Limited is well-positioned to leverage evolving consumer preferences and regulatory changes, focusing on premium products for sustained long-term growth.

Here are the major questions asked and their respective answers from the Q&A section of the earnings transcript:

1. Question: "Which brands have been driving the growth in the Prestige & Above category in the first half of this year?" Answer: "The P&A segment has been primarily driven by brands like Magic Moments, growing at about 20%. In FY24, we sold 6 million cases; in FY25, 7 million. We aim for 10 million in three years. Royal Ranthambore whisky grew by over 67%. After Dark whisky's volume hit 1.5 million in the first half of FY26."

2. Question: "Are you on track to hit the Rs. 500 crore target for the luxury and semi-luxury portfolio this year?" Answer: "Yes, based on the growth of brands like Royal Ranthambore, Rampur, and Jaisalmer, we remain confident in achieving the Rs. 500 crore goal for this financial year."

3. Question: "Can you quantify the benefit from UP's reforms in terms of working capital?" Answer: "UP's reforms have improved working capital by around 15 to 20 days. We expect to see further improvements in the second half as we manage resources efficiently."

4. Question: "How is growth outside Andhra Pradesh performing?" Answer: "Excluding Andhra Pradesh, we are experiencing double-digit growth, reflecting positive performance across other states, driven by our premium portfolio."

5. Question: "How is the luxury segment performing in terms of market share?" Answer: "Overall, Radico's market share has increased by approximately 200 basis points. This growth is evident across various states due to our premiumization strategy."

6. Question: "What is the current utilization level of the Sitapur distillery?" Answer: "The Sitapur distillery is operating at 95% capacity. This investment is crucial as it supports the grain-based ENA requirement for our branded business, contributing to our growth."

7. Question: "Are there any upcoming capex plans for distillation capacity?" Answer: "Currently, we don't foresee any need for further capex for distillation in the next 5 to 7 years, given the recent expansion and our existing capabilities."

8. Question: "What is your guidance for EBITDA margins moving forward?" Answer: "We anticipate a 150 basis point increase in EBITDA margins for this fiscal and project an additional 125 basis point growth annually over the next two years."

9. Question: "Can you discuss the outlook for the ready-to-drink segment?" Answer: "We've market-tested RTDs but decided to pause due to its limited traction compared to our vodka brand, which continues to gain popularity amongst younger consumers."

10. Question: "What are the future plans for your premium brands?" Answer: "We're expanding our luxury offerings, including plans for a tequila joint venture and further geographic distribution of our brands, maintaining focus on premiumization."

These concise responses capture the essential insights while adhering to the character limit.