RADICO - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 3.2

📊 Financials: Radico Khaitan has delivered stable quarterly profits (PAT ₹139 Cr vs ₹139 Cr). EPS at ₹34.3 supports earnings visibility. ROE at 13.6% and ROCE at 16.2% reflect moderate capital efficiency. Debt-to-equity ratio of 0.21 indicates low leverage, ensuring balance sheet strength. Dividend yield of 0.13% is minimal, offering limited income support.

💹 Valuation: Current P/E of 92.1 is significantly higher than industry PE of 36.2, suggesting steep overvaluation. Book value ₹218 vs CMP ₹3,191 implies a very high P/B multiple (~14.6x). PEG ratio of 8.34 highlights valuation far ahead of earnings growth. Intrinsic value appears lower than CMP, signaling caution.

🏭 Business Model: Radico operates in the alcoholic beverages industry, with strong brands in spirits and liquor. Competitive advantage lies in brand recognition, distribution reach, and premium product portfolio. Risks include regulatory challenges, taxation, and cyclical demand patterns.

📈 Entry Zone: Technically, support lies near ₹2,800–₹2,900 (DMA 200 zone). CMP at ₹3,191 is close to resistance (₹3,695). Entry is advisable only on dips closer to ₹2,800 for margin of safety.

📌 Long-term Holding: Strong brand portfolio and moderate returns make Radico attractive, but valuations are stretched. Long-term holding is justified only if earnings growth accelerates to match premium valuations.

Positive

• 📈 EPS of ₹34.3 supports earnings visibility.
• 📊 Healthy ROE (13.6%) and ROCE (16.2%) reflect moderate capital efficiency.
• 🏭 Strong brand presence in spirits and liquor industry.
• 💡 Low debt-to-equity ratio (0.21) ensures financial stability.

Limitation

• ⚠️ Extremely high P/E ratio (92.1) compared to industry average (36.2).
• 📉 PEG ratio of 8.34 highlights valuation ahead of earnings growth.
• 💸 Low dividend yield (0.13%) offers minimal income to shareholders.
• 📉 Flat quarterly PAT growth indicates limited earnings momentum.

Company Negative News

• 📉 Decline in DII holdings (-0.48%) signals reduced domestic institutional confidence.

Company Positive News

• 📈 Increase in FII holdings (+0.23%) shows foreign investor support.

Industry

• 🍷 Alcoholic beverages industry trades at PE of 36.2, highlighting Radico’s premium valuation.
• 📊 Industry growth supported by premiumization trends and rising consumer demand.

Conclusion

⚖️ Radico Khaitan is fundamentally strong with brand advantage and moderate returns, but valuations are stretched. Entry is advisable only near ₹2,800–₹2,900 support zones. Long-term holding requires caution unless earnings growth accelerates to justify premium multiples.

Would you like me to extend this with a peer benchmarking overlay against liquor peers like United Spirits and Globus Spirits to highlight comparative valuation and profitability?