RADICO Q3 FY25 earnings call.
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Revenue
₹1,294 Cr
verified against source
Revenue YoY
—
reported change
EBITDA
Pending
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Actual signal trajectory
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What the record says.
Radico Khaitan delivered 15.3% YoY IMFL volume growth in Q3 FY25, significantly outpacing industry. The Prestige & Above segment drove outperformance with 18% volume growth and 24.7% value growth, with P&A now comprising 51% of total IMFL volume versus 50% year-ago. Gross margin expanded to 43% from 41.8% YoY due to premiumization and stable raw material costs. The luxury/semi-luxury portfolio crossed INR 100 crore in Q3 alone and INR 250 crore in 9M FY25, with management guiding it will exceed INR 500 crore in FY26. Key brand momentum includes Royal Ranthambore (55% growth, entering CSD channel in Q4), After Dark joining the Millionaires Club (1.34M cases in 9M), and Magic Moments Vodka (1.8M cases, 60% industry market share). The Andhra Pradesh RTM change contributed ~800bps to volume growth with market share jumping from 10% to 15%+. Management targets 100-125bps annual EBITDA margin expansion over the next three years toward 13%. Risk includes grain inflation headwinds and competitive intensity in P&A segment, while Telangana receivables normalization expected in Q4.
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Guidance to track
- Luxury and semi-luxury brands crossed ₹100 crore in Q3 alone and ₹250 crore in 9M FY25. With exceptional domestic and international demand, management expects to cross ₹500 crore net sales in FY26, driven by new state rollouts and capacity expansion.
- Management targets 100-125 basis points annual EBITDA margin improvement over the next three years, reaching approximately 13% EBITDA margin by FY28, driven by product mix optimization and premiumization.
- The Prestige and Above segment, now 42% of the total IMFL market (up from 25% three years ago), is expected to sustain 15%+ volume growth, with Radico's growth excluding Andhra Pradesh running higher than 17.7% reported.
- After completing major expansion projects, maintenance and growth CapEx will run at ₹100-125 crore annually for the next two to three years, with vault capacity expected to double in three years to meet single malt demand.
Risks flagged
- Grain prices rose from ₹17,000 to ₹28,000 per tonne over 1.5 years. While FCI has opened ethanol production from FCI grain at ₹2,250, government policy execution remains uncertain. Food grain inflation impacted Q3 gross margins sequentially (down 60bps QoQ).
- A peer company reported slowdown in premium/luxury segment while Radico reports strong growth. Management claims all Radico brands are buoyant, but this divergence raises questions about market share dynamics and sustainability of premium segment demand.
- Telangana state government dues remain outstanding. Management indicated Radico's Telangana exposure is lower than peers, and payments are expected in Q4 following policy changes to 45-day payment cycles. However, government receivable timing risk persists.
- Analyst questioned why Radico's country liquor margins (mid-single digit) lag peer margins (14-17%). Management attributed it to mix of grain-based and molasses-based products and high grain inflation. Margin recovery depends on grain price easing and FCI policy execution.
Key quotes
- Three years back, the entire market segments for brands above regular segment were only 25% of the IMFL industry. Today, it has reached a whopping 42%, which means that the brands in the premium segment are gaining traction, and Radico is driving this growth.
- We expect with this business model that we achieve this. We expect margin to grow 100 basis points to 125 basis points every year for the next three years, thereby going on 13% kind of margin in next three years.
- Right now, that demand is more than what we can supply. In the next three years, we feel even our vault availability should double. So that will fuel the growth.
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