Alcoholic Beverage Report
Initiating Coverage | 31 October 2012 Sector: Consumer
Radico Khaitan
In high spirits
Gautam Duggad (Gautam.Duggad@MotilalOswal.com); +9122 3982 5404 Sreekanth P V S (Sreekanth.P@MotilalOswal.com); +9122 3029 5120
Investors are advised to refer through disclosures made at the end of the Research Report.
Radico Khaitan
Radico Khaitan: In high spirits
Page No. Summary ............................................................................................................ 3 Premiumization to help expand margins ..................................................... 4-6 Pricing environment turning favorable ....................................................... 7-9 Well positioned to capitalize on rising IMFL consumption ..................... 10-14 Financials: Premiumization led 23% EPS CAGR ........................................ 15-18 Radico NV Distilleries JV: Receives Mega project status ................................ 19 Valuations attractive, given strong earnings growth ahead................... 20-21 Annexure .................................................................................................... 22-26 Financials and valuation ........................................................................... 27-28
31 October 2012
2
Initiating Coverage |31 October 2012 Sector: Consumer
Radico Khaitan
BSE SENSEX S&P CNX
18,431
5,598
CMP: INR117 In high spirits
TP: INR152
Buy
Premiumization to help expand margins, pricing environment improving
Bloomberg RDCK IN Equity Shares (m) 132.6 52-Week Range (INR) 135/92 1,6,12 Rel. Perf. (%) 0/-16/-10 M.Cap. (INR b) 15.5 M.Cap. (USD b) 0.3
Focus on premiumization to help expand operating margins by 250bp over FY12-15 Incrementally better pricing environment - has received price hikes in several states in 1HFY13 Supportive valuations, 23% EPS CAGR to drive stock performance - expect 30% upside
Premiumization to help expand margins
We estimate 10.3% volume CAGR over FY12-15, backed by 20%
Radico Khaitan
In high spirits
Gautam Duggad (Gautam.Duggad@MotilalOswal.com); +9122 3982 5404 Sreekanth P V S (Sreekanth.P@MotilalOswal.com); +9122 3029 5120
Investors are advised to refer through disclosures made at the end of the Research Report.
Radico Khaitan
Radico Khaitan: In high spirits
Page No. Summary ............................................................................................................ 3 Premiumization to help expand margins ..................................................... 4-6 Pricing environment turning favorable ....................................................... 7-9 Well positioned to capitalize on rising IMFL consumption ..................... 10-14 Financials: Premiumization led 23% EPS CAGR ........................................ 15-18 Radico NV Distilleries JV: Receives Mega project status ................................ 19 Valuations attractive, given strong earnings growth ahead................... 20-21 Annexure .................................................................................................... 22-26 Financials and valuation ........................................................................... 27-28
31 October 2012
2
Initiating Coverage |31 October 2012 Sector: Consumer
Radico Khaitan
BSE SENSEX S&P CNX
18,431
5,598
CMP: INR117 In high spirits
TP: INR152
Buy
Premiumization to help expand margins, pricing environment improving
Bloomberg RDCK IN Equity Shares (m) 132.6 52-Week Range (INR) 135/92 1,6,12 Rel. Perf. (%) 0/-16/-10 M.Cap. (INR b) 15.5 M.Cap. (USD b) 0.3
Focus on premiumization to help expand operating margins by 250bp over FY12-15 Incrementally better pricing environment - has received price hikes in several states in 1HFY13 Supportive valuations, 23% EPS CAGR to drive stock performance - expect 30% upside
Premiumization to help expand margins
We estimate 10.3% volume CAGR over FY12-15, backed by 20%