RADICO Q2 FY25 earnings call.
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Revenue
₹1,116 Cr
verified against source
Revenue YoY
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reported change
EBITDA
Pending
latest reported figure
Source
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Actual signal trajectory
Where this quarter sits.
Quarter read
What the record says.
Radico Khaitan delivered a strong Q2 FY25 with 12.6% volume growth in prestige and above category and 18% value growth in that segment, driven by continued premiumization. Total IMFL volume was 6.78 million cases (+2.5% YoY). EBITDA margins expanded 250bps YoY due to operating leverage and mix improvement, with gross margin at 43.6% (up 258bps QoQ from Q1). The premiumization story is intact—P&A now constitutes 53.2% of IMFL volume versus 47.1% a year ago. Management targets 100-125bps annual margin improvement over the next three years to reach late-teens EBITDA margins. Luxury and semi-luxury segments are growing at double-digits on top-line, and Magic Moments Vodka maintains 60% market share with strong double-digit growth. Risks include ongoing grain inflation volatility, state-specific disruptions in regular category (Karnataka, UP, Uttarakhand), and Telangana receivables issues. Andhra Pradesh's new policy is viewed as positive for cash flows. Management projects mid-single digit growth in regular category going forward.
Colored figures show movement against the previous available record.
Guidance to track
- Management targets progressive margin improvement, expecting to reach late-teens EBITDA margins in three years, with Q3 onward seeing further grain and E&A cost relief.
- Prestige and above category expected to maintain strong momentum with 15%+ volume growth over the next two quarters and into one to two years, driven by premiumization and new product launches.
- State-specific disruptions (Karnataka price hikes, UP quotas, Andhra Pradesh elections) have largely normalized; regular segment expected to return to mid-single digit growth from Q3 onward.
- Management working on one premium brand launch expected to hit markets either this fiscal year or by beginning of next fiscal year.
Risks flagged
- Despite recent easing due to good monsoon and buffer stocks, aggressive ethanol bidding has moved prices up in non-season period. Management expects softening from November onward but volatility persists.
- Analyst raised concerns about increased competition from local players and international brands being brought in by domestic players. Management acknowledged competition has been high for 5-7 years but dismissed as status quo.
- Karnataka saw 40%+ volume decline due to price increases. Management rationalizing portfolio in Kerala and other states based on profitability. Growth recovery uncertain amid ongoing state-specific disruptions.
- Government payments only recently resumed for past two months. Situation improving but not resolved, with Telangana needing to compete with Andhra Pradesh to maintain stock availability.
Key quotes
- The margin improvement trajectory will continue.
- As we have been guiding in earlier calls also, that we will improve our margin every year by 150 basis points or so, so over the last year, we will be doing much better than that in this year, and thereafter also for next three years, we will continue to improve our margin by 100 to 125 basis points, and that how we will reach to the late teens margin in three years' time.
- Andhra is going to be the sunshine market for this space in the times ahead.
- We are the leader with 60% market share across all price category. So I think we see a great growth, and we continue to see strong double-digit growth in years to come.
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