Radico Khaitan Limited

Radico Khaitan reported an impressive 28% volume growth in Q4 FY25, its highest in three years, with total IMFL volume reaching 9.15 million cases. The Prestige & Above category saw robust growth of 17% in volume and 22% in value, while overall IMFL realization increased by 4.6% year-on-year. Gross margin improved to 43.5% in Q4 FY25, up from 41% in Q4 last year, driven by premiumization and stable raw material costs.

FY25 marked a record year for Radico Khaitan, achieving its highest-ever turnover of INR 4,851 crores, EBITDA of INR 668 crores, and PAT of INR 341 crores. The flagship Magic Moments Vodka brand surpassed the milestone of 7 million cases during the financial year, demonstrating its growing popularity. The company also expanded its backward integration and distribution capabilities, contributing to its overall success.

The company is aggressively pursuing its premiumization journey, with two new luxury brands slated for launch in Q1 FY26 and a super-premium whisky entering the market in H1 FY26. These launches are expected to build on the success of existing luxury brands like Royal Ranthambore, which is growing by 50%. The luxury and semi-luxury portfolio achieved INR 340 crores in FY25, growing 32%, and is targeted to surpass INR 500 crores in FY26.

Management views the UK FTA as a significant positive, expecting a 6-8% reduction in consumer price or MRP for imported AlcoBev. Radico Khaitan anticipates substantial cost savings on its bulk scotch imports, projected to exceed INR 250 crores in FY26, which will enhance margins. The company does not foresee foreign premium brands reducing prices, allowing Radico to maintain its premium pricing strategy and benefit from the duty reduction.

Andhra Pradesh's market share for Radico surged from 10% in H1 to 23% in Q4 FY25, driven by new excise policies and route-to-market changes. In Uttar Pradesh, new policies have expanded the universe of outlets by 40% and shifted excise duty payment to wholesalers, improving working capital. The Delhi excise policy is extended for three months, with a new policy expected in July, which could further benefit organized brands.

Raw material prices, including broken rice and maize, have softened, with broken rice falling from INR 27,500-28,000 to INR 25,000 per ton. ENA and glass prices are expected to remain stable in FY26, contributing to margin stability. The company reduced its debt by INR 114 crores over the last year and aims for a 35-40% debt reduction in FY26, targeting to be almost debt-free by FY27 through efficient working capital management and cash flow generation.