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Radico Khaitan Posts Strong Q2 on Robust Volume Growth; ICICI Direct Retains ‘Buy’ Rating with ₹3,710 Target

By S JHA

Mumbai, November 8, 2025 —Radico Khaitan Ltd (RKL) delivered a strong performance in the second quarter of FY26, driven by double-digit volume growth and continued momentum in its premium portfolio, according to a research report by ICICI Direct.

The leading Indian-made foreign liquor (IMFL) producer reported a 34% year-on-year (YoY) rise in net revenue to ₹1,493.9 crore, while overall volumes jumped 37.7% YoY to 9.3 million cases. The “Prestige & Above” (P&A) segment grew 21.7% YoY to 3.9 million cases, contributing 67% of total revenue in Q1FY26, while the regular and other segments surged 79.4% YoY to 5.04 million cases.

Despite stable input costs, gross margins were flat at 43.6%, but EBITDA margins improved 129 bps YoY to 15.9%, aided by operational efficiencies and lower finance costs. Adjusted profit after tax (PAT) rose 69% YoY to ₹139 crore.

Premium Portfolio Driving Growth

ICICI Direct highlighted the sustained growth in RKL’s premium and luxury brands. Magic Moments Vodka continues to deliver around 2 million cases per quarter, while After Dark Whisky recorded 115% YoY growth in H1FY26, reaching 1.5 million cases, with full-year sales expected at 3 million cases.

Luxury brand Royal Ranthambore Whisky posted 67% volume growth in Q2FY26, with the company targeting ₹500 crore in revenue from the luxury segment in FY26. ICICI Direct projects the P&A segment’s sales volume to grow at a 19% CAGR and revenues at 22% CAGR over FY25–28E.

Meanwhile, the regular segment rebounded sharply, growing 67% YoY to 10.5 million cases, supported by changes in route-to-market strategy in Andhra Pradesh. The report anticipates another strong quarter ahead, followed by a return to 6–8% steady growth.

Margin Expansion and Debt Reduction Outlook

RKL’s EBITDA margin improved by 180 bps YoY to 15.7% in H1FY26. The management aims to sustain double-digit P&A growth, accelerate premiumization, and enhance margins through cost optimization. ICICI Direct expects margins to expand by ~300 bps to 16.8% by FY28.

Net debt stood at ₹427 crore as of H1FY26, down ₹146 crore since March 2025. With no major capex planned for the next 5–6 years and its Sitapur facility operating at optimal levels, RKL plans to utilize cash flows to become debt-free by FY27.

Valuation and Recommendation

ICICI Direct forecasts RKL’s revenue and PAT to grow at 19% and 38% CAGR, respectively, over FY25–28E, driven by continued premiumization and operational efficiencies. The brokerage reiterated its ‘Buy’ rating with a target price of ₹3,710, valuing the stock at 61x average FY27–28E earnings.

About the Company: Radico Khaitan is one of India’s largest IMFL companies, with a production capacity of 321 million litres per annum and a portfolio of eight millionaire brands across segments.

(Disclaimer: This article makes no recommendation for buy or sell of shares of any company)