RADICO - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.2
| Stock Code | RADICO | Market Cap | 37,057 Cr. | Current Price | 2,770 ₹ | High / Low | 3,695 ₹ |
| Stock P/E | 69.8 | Book Value | 218 ₹ | Dividend Yield | 0.14 % | ROCE | 16.2 % |
| ROE | 13.6 % | Face Value | 2.00 ₹ | DMA 50 | 3,010 ₹ | DMA 200 | 2,864 ₹ |
| Chg in FII Hold | 1.82 % | Chg in DII Hold | -1.45 % | PAT Qtr | 162 Cr. | PAT Prev Qtr | 139 Cr. |
| RSI | 40.6 | MACD | -100.0 | Volume | 13,54,495 | Avg Vol 1Wk | 7,43,049 |
| Low price | 1,846 ₹ | High price | 3,695 ₹ | PEG Ratio | 6.33 | Debt to equity | 0.21 |
| 52w Index | 50.0 % | Qtr Profit Var | 69.1 % | EPS | 38.7 ₹ | Industry PE | 31.4 |
📊 Analysis: Radico Khaitan trades at a high P/E of 69.8 compared to the industry average of 31.4, indicating overvaluation. ROE (13.6%) and ROCE (16.2%) are decent but not strong enough to justify such high multiples. The PEG ratio of 6.33 highlights limited growth relative to valuation. Dividend yield is negligible at 0.14%, offering little income support. On the positive side, quarterly PAT grew from ₹139 Cr. to ₹162 Cr. (+69.1%), and EPS stands at ₹38.7, showing earnings strength. Technical indicators (RSI 40.6, MACD negative) suggest weakness and possible consolidation. Ideal entry zone lies between ₹2,500–₹2,650, closer to support levels and below DMA averages.
📈 Exit Strategy: If already holding, investors should consider a medium-term horizon of 2–3 years, focusing on earnings consistency. Partial profit booking can be considered near ₹3,200–₹3,400 if valuations stretch further. Long-term holding is risky unless growth accelerates and valuation multiples normalize.
✅ Positive
- ROCE (16.2%) and ROE (13.6%) show moderate efficiency.
- Quarterly PAT growth of 69.1% indicates earnings momentum.
- EPS of ₹38.7 reflects profitability strength.
- Low debt-to-equity ratio (0.21) ensures financial stability.
- FII holdings increased (+1.82%), showing foreign investor confidence.
⚠️ Limitation
- High P/E (69.8) compared to industry average (31.4).
- PEG ratio of 6.33 suggests poor valuation-to-growth balance.
- Dividend yield of 0.14% offers negligible income.
- Stock trading below DMA 50 and DMA 200 indicates weak momentum.
📉 Company Negative News
- Weak technical momentum with MACD negative.
- DII holdings declined (-1.45%), showing reduced domestic confidence.
- High valuation multiples limit near-term upside.
📈 Company Positive News
- Quarterly PAT improved significantly to ₹162 Cr.
- EPS growth supports profitability outlook.
- Strong FII inflows reflect foreign institutional support.
🏭 Industry
- Industry PE at 31.4 suggests sector is moderately valued.
- Alcoholic beverages sector benefits from rising demand and premiumization trends.
- Brand strength and distribution network provide competitive advantage.
🔎 Conclusion
Radico Khaitan is moderately attractive but currently overvalued. Ideal entry is around ₹2,500–₹2,650 for better valuation comfort. Existing investors should hold for 2–3 years, with partial profit booking near ₹3,200–₹3,400. While fundamentals are decent and earnings momentum is improving, stretched valuations and weak technicals require cautious monitoring.