RADICO - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 3.8

📊 Long-Term Investment Analysis: Radico Khaitan Ltd (RADICO)

Radico Khaitan is a premium play in India’s alco-bev sector, with strong brand equity and aggressive expansion into luxury segments. However, its valuation and PEG ratio raise caution for long-term investors.

✅ Strengths

Strong ROCE (16%) and ROE (13.3%): Indicates efficient capital use.

Low Debt-to-Equity (0.27): Financially stable.

Premiumization Strategy: Focus on high-margin brands like Rampur Single Malt, Jaisalmer Gin, and Royal Ranthambore Whisky

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Quarterly PAT Growth (70.8%): Strong earnings momentum.

Brand Expansion: Entry into CSD channel and international markets

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Brokerage Buy Ratings: ICICI Securities has a target of ₹3,050

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⚠️ Concerns

Extremely High P/E (104) vs Industry PE (32.9): Overvalued.

PEG Ratio of 11.0: Indicates poor valuation relative to growth.

Low Dividend Yield (0.15%): Not ideal for income investors.

Book Value (₹206) vs Price (₹2,687): High P/B ratio (~13), signals premium pricing.

Flat PAT QoQ: ₹92.1 Cr vs ₹95.5 Cr, showing margin pressure.

🎯 Ideal Entry Price Zone

Based on valuation compression and technical support

Fair Value Estimate: ₹2,300–₹2,450

Ideal Entry Zone: ₹2,350–₹2,500

Near 200 DMA (₹2,377) and below recent high of ₹2,790

Offers better risk-reward balance for long-term investors

🧭 Exit Strategy / Holding Period

If you already hold RADICO

📌 Holding Period

3–5 years, to benefit from premium segment growth and margin expansion.

Long-term targets suggest potential price of ₹3,800 by 2026 and ₹6,200+ by 2027

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🚪 Exit Strategy

Partial Exit: If price crosses ₹3,050–₹3,200 without ROE improving above 15%.

Full Exit: If PEG ratio remains above 5 or PAT growth flattens for 2+ quarters.

Monitor

Margin trends in premium brands

Regulatory changes in liquor taxation

Expansion success in international and CSD channels

📉 Summary Table

Metric Value Verdict

P/E 104 Overvalued ⚠️

ROE 13.3% Strong ✅

ROCE 16.0% Efficient ✅

PEG Ratio 11.0 Unfavorable ⚠️

Dividend Yield 0.15% Low ⚠️

Debt-to-Equity 0.27 Stable ✅

Entry Price Zone ₹2,350–₹2,500 Cautious Buy ⚠️

Exit Price Trigger ₹3,200+ Profit Booking Zone ⚠️

Would you like a comparison with peers like United Spirits or Sula Vineyards, or a breakdown of Radico’s premium brand portfolio?

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www.indianretailer.com

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concallanalysis.com

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economictimes.indiatimes.com

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dailybulls.in

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stockpricearchive.com

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