How Radico Khaitan Delivered Industry-Beating Volume Growth In Q3
Raw material costs weighed on Radico Khaitan’s gross margin in Q3 but CFO Dilip Banthiya believes the worst is over on this front.
Liquor maker Radico Khaitan Ltd.’s industry-beating volume growth in the quarter ended December has expanded the company’s market share, according to its Chief Financial Officer Dilip Banthiya.
The maker of Magic Moments vodka sold 14 percent more in volume terms in the third quarter, Banthiya said. That compares with the liquor industry’s 1.5 percent growth during the same period. The CFO didn’t quantify the company’s market share gains.
The company’s gross margins, however, dipped by 90 basis points year-on-year on account of higher raw material costs.
“Because there was an increase in raw material costs in this period, we have seen a 22 percent increase in our ENA (extra neutral alcohol) prices versus the same quarter last year. But some of it was offset by price hikes,” Banthiya told BloombergQuint during an interaction Thursday. That said, “we feel that the worst is over for us from the raw material side because a good monsoon aided production”.
Going forward, Banthiya is bullish on the contribution of premium brands to Radico Khaitan’s sales. In the December quarter, they accounted for over 50 percent of the company’s IMFL (Indian-made foreign liquor) sales in volume terms and contributed 29.4 percent to overall revenue, he said.
Radico Khaitan Q3 Results 2019-20: Key Highlights (YoY)
- Gross revenue fell 2.2 percent to Rs 2,012 crore
- Net profit rose 17.2 percent to Rs 648 crore
- Ebitda rose 8.2 percent to Rs 103.10 crore
- Ebitda margin stood at 15.9 percent vs 17.2 percent a year ago
- Raw material costs up 25 percent to Rs 342 crore
On Friday, the company's shares traded as much as 1.47 percent higher, tracking the benchmark Nifty 50 index that was up 0.45 percent.
