Q3 Results: Radico Khaitan Expects ‘Premiumisation’ To Help Improve Margin

Radico Khaitan Ltd. expects premiumisation of its products to help increase volumes and margin in the next two to three years, its Managing Director Abhishek Khaitan told BloombergQuint.

Khaitan said that while the raw material scenario appears to be benign as of now, the alcohol prices might shoot up by Rs 2 to 3 per litre due to the new ethanol policies.

“But with our premiumisation drive, we’ll be able to maintain our margin and in fact we’ll do better than that in the next two to three years,” Khaitan said.

The Magic Moments vodka maker posted about 50 percent jump in net profit in the quarter ended December and a margin expansion of 130 basis points on an year-on-year basis. The robust quarterly performance, according to Khaitan, is led by an uptake of its premium products and debt payoffs.

“In the last two years and nine months, we have delevered the company by Rs 570 crore,” Khaitan said, adding that in the current fiscal itself, the company paid off Rs 277 crore worth of debts, of which Rs 77 crore were paid in the reported quarter. This, he said, helped Radico Khaitan bring down its interest costs by nearly 50 percent.

Khaitan said the company has not laid out any major capital expenditure plan to cater to the rising demand in the sector, but he noted that Radico Khaitan expects to have a yearly capex of about Rs 40 crore to Rs 50 crore in the next two to three years.

Q3 Results Highlights (YoY)

• Revenue up 17 percent at Rs 553 crore
• Net profit jumps 48.9 percent to Rs 52.1 crore
• Ebitda rises 27 percent to Rs 95.9 crore
• Margin expands to 17.3 percent versus 16 percent

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