Radico Khaitan Limited

The company highlighted the finalization of the UK-India FTA, which reduces duty on bulk scotch from 150% to 75%, eventually settling at 40% in the 10th year. Radico Khaitan anticipates significant cost advantages, with scotch requirements valued at over Rs. 250 crores in FY26 and imports expected to cross Rs. 400 crores within three years. This development is poised to enhance the company's premium offerings and profitability.

Radico Khaitan achieved its highest-ever quarterly volumes, net sales, and profitability in Q1 FY26. IMFL volumes grew by an impressive 37.5% year-on-year, driven by robust demand for its premium portfolio. The prestige and above category demonstrated strong growth, with volumes increasing by 41% and value by 43%, contributing significantly to the overall performance.

The quarter saw the strategic launch of Morpheus Super Premium Whisky, marking the company's entry into a high-margin, fast-growing segment. Initial market response has been very positive, with plans for launch in 10 states covering 70% of the industry in H2. Additionally, 'The Spirit of Kashmyr,' a luxury vodka, was introduced to address a market gap for premium Indian offerings, with ambitions for global scaling, reinforcing Radico's leadership in the vodka space.

Existing premium brands continued their strong performance, underscoring the success of the premiumization strategy. Royal Ranthambore recorded exceptional 90% growth, while Magic Moments vodka saw 20% volume growth, having crossed 7 million cases last year. After Dark Whisky, which sold 1.9 million cases last year, is on track to double its volume this fiscal, contributing to the nearly 50% year-on-year value growth in luxury and semi-luxury brands, targeting Rs. 500 crores revenue in FY26.

Gross margin improved to 43% in Q1 FY26 from 41% in Q1 FY25, supported by premiumization and a stable raw material environment. EBITDA margin expanded significantly from 13.0% to 15.3% year-on-year, despite higher marketing spend, due to economies of scale. The company revised its margin expansion guidance upwards to 125-150 basis points year-on-year for the next three years. Net debt was reduced by Rs. 164 crores since March '25, and Radico Khaitan aims to be almost debt-free by FY27.

Andhra Pradesh continued to be a strong market, with Radico Khaitan increasing its market share from 10% in H1 FY25 to over 28% in Q1 FY26, the highest in the industry. While Maharashtra's recent policy changes are drastic and could lead to consumer price increases, management expressed confidence that the market's sensitivity and potential revenue loss for the state government would lead to corrective actions. Favorable excise policies in UP and Andhra Pradesh were also noted as positive drivers.

The company plans an average annual Capex of Rs. 150-160 crores for the next two years, primarily focused on brand and malt-related investments. This modest capex, combined with strong profitability and working capital management, supports the overarching goal of debt reduction and efficient capacity utilization, without requiring significant external funding.