Motilal Oswal Maintains Buy Rating for Radico Khaitan, Targets Rs 3850

Motilal Oswal Maintains Buy Rating on Radico Khaitan

Radico Khaitan (RDCK) has consistently outpaced the industry in terms of growth, resulting in significant market share gains. According to the company's data, Radico Khaitan's market share has grown to approximately 8% of the ~400 million cases in the Indian Made Foreign Liquor (IMFL) market in FY25, with the company selling around 31 million cases.

Radico Khaitan's performance in the premium and above (P&A) segment has been particularly impressive. The company's P&A volumes have expanded from approximately 4 million cases in FY15 to an expected 17 million cases in FY26E. This substantial increase has had a positive impact on Radico Khaitan's earnings profile, with P&A contributing around 70% of the company's IMFL revenues. This figure is expected to increase further, driven by premiumization and operational efficiencies.

In terms of earnings growth, Motilal Oswal expects Radico Khaitan to achieve a compound annual growth rate (CAGR) of approximately 25% in earnings per share (EPS) over the period of FY26-28E. This is considered sufficient to support the company's rich valuations. Based on this growth projection, the research firm values Radico Khaitan at 55 times its FY28E EPS, which translates to a target price of INR3,850. Motilal Oswal has maintained its BUY rating on the stock.

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Note: The CAGR calculation is based on the provided data and may not reflect the actual growth rate.