Radico Khaitan Limited — Q4 FY26

Radico Khaitan Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=7DIhNHX5aR8 Published: 6 days ago

0:02 2 seconds Ladies and gentlemen, good day and welcome to the Radico Kate Unlimited Q4 FY26 earnings conference call hosted by 0:11 11 seconds TAM Capital Advisor. As a reminder, all participant lines will be in the listenon mode and there will be an 0:18 18 seconds opportunity for you to ask question after the presentation concludes. Should you need assistance during this conference call, please signal an 0:26 26 seconds operator by pressing star then zero on your touchstone phone. Please note that this conference has been recorded. I now 0:34 34 seconds hand the conference over to Mr. Abishek Mera. Thank you and over to you sir. 0:39 39 seconds Thank you. Good evening everyone. We would like to thank Radik Katan's management for providing DAM Capital with the opportunity to host Q4 FI26 earnings call. Today we have with us Mr. 0:50 50 seconds Abi Abhishek Khan managing director Mr. 0:53 53 seconds Dilibia CFO Mr. Sanjiv Banga President International Business and Mr. Sudadya Chief Sales Officer. Now I would like to 1:01 1 minute, 1 second hand over the call to Mr. Abishek Katan for his opening remarks. Thank you and over to you sir. 1:08 1 minute, 8 seconds Good afternoon ladies and gentlemen and thank you for joining us on radical Q4 FYI26 earnings conference call. 1:19 1 minute, 19 seconds FYI26 has been an important year for Radical Ketan and in many ways an inflection point in our journey. The 1:27 1 minute, 27 seconds business delivered a strong performance supported by disciplined execution, a richer portfolio mixed focus on valueled growth. 1:39 1 minute, 39 seconds During the year, we crossed two key milestones with net revenue exceeding 6,000 crores and Aida crossing 1,000 crores. 1:50 1 minute, 50 seconds These achievements reflect the sustainability of our business model, the strength of our brands, the investments we have made over the years 1:59 1 minute, 59 seconds and the growing scale of our premium and luxury portfolio. Our prestige and above segment continued to lead growth while 2:08 2 minutes, 8 seconds our luxury portfolio delivered sales value of 475 crores in line with our guidance. 2:16 2 minutes, 16 seconds We expect to sustain this growth momentum and deliver 25% growth in FY27 2:22 2 minutes, 22 seconds in this portfolio. Our recently launched luxury brand Rampur 1943 Vas Indian 2:30 2 minutes, 30 seconds Single Malt and the Spirit of Kashmir luxury vodka are gaining strong traction with consumers and the trade. In 2:39 2 minutes, 39 seconds February this year, globally renowned whiskey expert and author of the whiskey bible Jim Mor was in India for an exclusive tasting event of Viras. 2:51 2 minutes, 51 seconds He also visited Rampur for the opening of our latest stilt house. His earlier visit to Rampur was nearly three decades 2:59 2 minutes, 59 seconds ago when our first mall plant was just a couple of years old. 3:05 3 minutes, 5 seconds Our current single mall portfolio not only showcases the craftsmanship behind various expressions but also reflects 3:13 3 minutes, 13 seconds the growing international interest in Indian single malls. 3:19 3 minutes, 19 seconds Alongside this, our broader premium portfolio continues to scale steadily across key markets supported by sharper execution and increasing consumer pull. 3:31 3 minutes, 31 seconds Royal Vanthamore Whiskey delivered an outstanding performance growing over 50% during the year driven by strong demand across both civil and CSD channels. 3:44 3 minutes, 44 seconds Magic Moment continued its strong trajectory with 21% volume growth during 3:50 3 minutes, 50 seconds the year to reach 8.6 million cases and around 1,500 crores in sales value 3:58 3 minutes, 58 seconds further strengthening its leadership in the vodka category. 4:02 4 minutes, 2 seconds During Q4, Magic Moment registered 28% year-on-year growth. New flavor 4:09 4 minutes, 9 seconds innovations including flavors of India category are contributing to this robust momentum. 4:16 4 minutes, 16 seconds Going forward, we'll continue to add more flavors as we lead disruptive growth in the category. 4:24 4 minutes, 24 seconds After dark whiskey continue to deliver strong performance, recording over 60% growth and crossing 3.1 million cases during the year. 4:35 4 minutes, 35 seconds We also continue to deepen consumer engagement through focused marketing on trade activations and brand advocacy initiatives. 4:44 4 minutes, 44 seconds The Royal Anthem Board Limited Edition pack celebrating India's six legendary tigers brought together premium 4:52 4 minutes, 52 seconds storytelling with a strong message around wildlife conservation. 4:56 4 minutes, 56 seconds Our experiential campaigns and focused digital engagement further helped us connect with younger consumers in a more authentic manner. 5:07 5 minutes, 7 seconds As we have discussed earlier, the on-rade channel continues to be a strategic priority for us. Over the last 5:14 5 minutes, 14 seconds two years, we have made significant progress in building a stronger foundation and the results have been in the line with our expectations. 5:24 5 minutes, 24 seconds In FY27, we will further scale our on trade agenda across advocacy, distribution expansion, key account partnership and airports. 5:36 5 minutes, 36 seconds These init initiatives will enhance visibility, trials, consumer experience and premium brand activations, 5:43 5 minutes, 43 seconds strengthening the reach and salience of our luxury and premium portfolio. 5:50 5 minutes, 50 seconds From a financial performance perspective, the year has been encouraging. A better portfolio mix relatively benign input costs and the 5:59 5 minutes, 59 seconds benefit of scale have helped us to improve margins and return. 6:04 6 minutes, 4 seconds We will however continue to monitor the global environment closely, especially developments in West Asia given the 6:12 6 minutes, 12 seconds possible implications for supply chains and input costs. 6:17 6 minutes, 17 seconds Looking ahead, the consumer environment remains supportive and we remain confident about Radico Ketan's long-term growth opportunity. 6:26 6 minutes, 26 seconds Our focus will remain on building our premium and luxury portfolio, investing behind the innovation and brand equity 6:34 6 minutes, 34 seconds during FY27. We expect to grow our prestige in our portfolio volume by 20% 6:41 6 minutes, 41 seconds and expect our IITA margin to expand by 125 basis points for the full year. With 6:48 6 minutes, 48 seconds that, I would now like to hand over the call to our CFO Philip Panta for a detailed review of our financial and 6:56 6 minutes, 56 seconds operational performance. Thank you over to you Philip. 7:01 7 minutes, 1 second Thank you Abishek. Thank you everyone for joining us on this call today. 7:06 7 minutes, 6 seconds Financial year 26 was milestone year for Radikan with robust operating performance translating into higher 7:14 7 minutes, 14 seconds profitability, improved return ratio and enhanced cash flow free cash flow generation. 7:21 7 minutes, 21 seconds The result demonstrate the power of our minimumization strategy, growing scale advantage, input cost stability and disciplined financial management. 7:32 7 minutes, 32 seconds During quarter four of financial year 26, we delivered a strong all round performance with total IML volume of 7:41 7 minutes, 41 seconds 9.52 million cases reflecting a 4% increase yearon-year basis. Prestige and 7:50 7 minutes, 50 seconds above category continued strong upward trajectory recording 28% volume growth. 7:57 7 minutes, 57 seconds The performance was supported by strong brand momentum and premiumization le product mix. 8:05 8 minutes, 5 seconds Regular volume deg growth was due to a higher base in quarter 4 of FY25 after the change in the route to the 8:14 8 minutes, 14 seconds market in the state of Andhra Pradesh and the impact of policy changes in Maharashtra and Karnataka 8:22 8 minutes, 22 seconds on the profitability fund gross maring during the quarter was 48% representing an expansion of 450 basis point on 8:30 8 minutes, 30 seconds year-on-year basis and 150 basis point sequentially. 8:36 8 minutes, 36 seconds The improvement was led by better product mix, softer raw material prices and ongoing premiumization. 8:43 8 minutes, 43 seconds We continue to monitor evolving situation in West Asia and confident of our margin expansion trajectory over the mid to long term. 8:52 8 minutes, 52 seconds IA margin during the quarter stood at 19%. 8:56 8 minutes, 56 seconds Expanding expanding 565 basis points year on year. highest ever IDA margin 9:03 9 minutes, 3 seconds reflecting the strength of our premium margin studies operating leverage and continued cost discipline. 9:11 9 minutes, 11 seconds This margin performance is an important outcome of investment we have made over the years in building our premium and luxury portfolio. 9:21 9 minutes, 21 seconds The improvement in profitability has also translated into stronger return ratios. Higher operating profit and 9:30 9 minutes, 30 seconds better asset utilization have contributed to improved return on equity and return on capital employed. 9:38 9 minutes, 38 seconds As the prestige luxury portfolio continue to scale, we expect further improvement in the overall capital efficiency of the business. 9:49 9 minutes, 49 seconds Turning to the balance sheet, net debt reduced by 329 crores during the year, driven by improved profitability and cash flow generation. 10:00 10 minutes Our balance sheet remains strong and we are well on track to become debt-free in financial year 27. 10:09 10 minutes, 9 seconds Capital allocation continues to be prudent and selective with ongoing capex largely directed toward maintenance, 10:17 10 minutes, 17 seconds efficiency improvement and essential cap capacity optimization. 10:24 10 minutes, 24 seconds In line with our commitment to the shareholder value, the board has articulated a strong dividend policy 10:31 10 minutes, 31 seconds with a minimum payout of 20% of profit after tax. 10:36 10 minutes, 36 seconds This reflect our confidence in the cash flow generation of the business and maintaining adequate flexibility to invest behind future growth opportunities. 10:48 10 minutes, 48 seconds Looking ahead while we remain mindful of our external volatility, the cost environment, operating leverage benefit 10:57 10 minutes, 57 seconds and financial discipline to provide comfort on margin sustainability and cash flow generation. Our focus will 11:04 11 minutes, 4 seconds remain on driving profitable growth, strengthening the balance sheet, improving return ratio and enhancing 11:11 11 minutes, 11 seconds shareholder value. With that, we now open the line for question answer. 11:19 11 minutes, 19 seconds Thank you. We will now begin the question and answer session. Anyone who wishes to ask question may press star 11:26 11 minutes, 26 seconds and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 11:32 11 minutes, 32 seconds two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. 11:48 11 minutes, 48 seconds The first question is from the line of Adita Suman from CLSA. Please go ahead. 11:55 11 minutes, 55 seconds Hi uh good evening and thanks for the opportunity. Uh so two questions uh firstly can you throw some light on sort 12:03 12 minutes, 3 seconds of new product launch plans for physical 27 particularly in the uh prestige and above and luxury space uh and and second 12:11 12 minutes, 11 seconds uh sort of your your 125 basis point margin expansion is uh fairly robust given the commodity environment. So one 12:19 12 minutes, 19 seconds how do you plan to mitigate the higher commodity cost and and is this margin expansion over full year 26 or or 4Q 26 12:28 12 minutes, 28 seconds that's it uh to answer your first question about 12:34 12 minutes, 34 seconds the new launches if you see in the last year itself we've launched uh three four plants in the luxury as well as the PNA 12:42 12 minutes, 42 seconds category so we want to consolidate that that will be our first objective and take it nationally like our virat Indian single mall the 12:51 12 minutes, 51 seconds spirit of Kashmir like it is in 10 states we want to take it to 20 states so that will be our prime focus plus 12:58 12 minutes, 58 seconds we've launched new flavors of magic like jamun mango and I which we are going to 13:06 13 minutes, 6 seconds again take it nationally and in the coming year what we feel we are going to launch is u uh new some more flavors in 13:15 13 minutes, 15 seconds the magic family And those will be also in the flavors of India category. Plus 13:22 13 minutes, 22 seconds at the end of the year we'll be coming out with a tequila in their spirits. So these are our 13:30 13 minutes, 30 seconds launch plans and as far as the margin goes. 13:34 13 minutes, 34 seconds So on the margin front uh Aritia actually as you have noticed that in uh last quarter we have improved our uh 13:43 13 minutes, 43 seconds gross margin by 450 basis point and AIDA margin by 565 basis point and we are 13:49 13 minutes, 49 seconds quite confident to add 120 basis point to 125 basis point margin in the coming 13:57 13 minutes, 57 seconds year 27. So this is an annualized uh on annualized basis we have got the price increases in some of the state which 14:05 14 minutes, 5 seconds amount to be around 60 basis point. At the same time product premiumization will yield us more than 200 basis 14:13 14 minutes, 13 seconds points. So we will be more than mitigating uh the the impact of the cost push and thereafter also we are 14:20 14 minutes, 20 seconds confident to deliver uh 120 to 125 basis point margin expansion. 14:28 14 minutes, 28 seconds that that is very clear. Thanks very much. And and just uh one follow up on the margins. So will there also be some unlock given that you had a large number 14:36 14 minutes, 36 seconds of new launches last year and so I'm assuming the author's marketing spend behind that. So could there be some unlock in in uh marketing spend as well 14:44 14 minutes, 44 seconds given that there's number of new launches is lower. 14:49 14 minutes, 49 seconds We have been actually consistent in our policy on spend in the marketing and as we have always been guided uh that uh 14:57 14 minutes, 57 seconds with 6 to 8% is the bracket where we spend the marketing expenses depending on the new launch in our existing 15:05 15 minutes, 5 seconds flagship brand. So we'll balance out in that. So and as we are topline has grown 15:11 15 minutes, 11 seconds by 25% this year also. So the increase in topline will further uh increase the 15:18 15 minutes, 18 seconds quantum of the marketing expense will be within that. 15:22 15 minutes, 22 seconds Perfect. That's very clear. Thanks so much. 15:28 15 minutes, 28 seconds Thank you. The next question is from the line of Vishal Kutka from ESK Investment Managers. Please go ahead. 15:37 15 minutes, 37 seconds Yeah, I congratulate numbers. Uh three question from one my side. Uh first of all Canada state uh now between your new 15:44 15 minutes, 44 seconds policy announced by the state the pricing differences between regular and clean has come down so how do you plan to capture that given that the gap has 15:52 15 minutes, 52 seconds come down a bit driving the premation and accommodations agenda that you have. Uh second question is on West Bengal. 15:58 15 minutes, 58 seconds Now there's a change in government uh that has happened. Uh you think there could be a meaningful change in the way 16:05 16 minutes, 5 seconds the market operates and if you can create a if you can provide a framework as of now how the market is operating as 16:12 16 minutes, 12 seconds on this. Answer the third question on VR state. Um only hearing rumors that uh prohibition could be uplifted if it can 16:20 16 minutes, 20 seconds throw any update that you are aware about. Thank you. 16:25 16 minutes, 25 seconds Hi uh this is Sudhir Pajay. So first of all uh regarding Karnataka uh which you had asked yes we had seen last time when 16:34 16 minutes, 34 seconds Karnataka uh has uh rationalized the pricing for the premium brand there was a significant increase which has come on 16:42 16 minutes, 42 seconds the uh premium brands and since we have the portfolio of the premium brands which is like Ramo Jel Roy etc. It is 16:49 16 minutes, 49 seconds very well established there. We had also gained the advantage on account of this price initialization which has been de 16:56 16 minutes, 56 seconds almost a year and a half back. Now this time also we are anticipating that government is working on the similar line although the official announcement 17:04 17 minutes, 4 seconds is not there. In that case if it's going to be there we will certainly be benefited with that. Uh your second point is regarding the West Bengal West 17:12 17 minutes, 12 seconds Bengal it's it's too uh you know it's too early to preempt anything because there is a change which is recently done. So we will wait and watch uh on 17:21 17 minutes, 21 seconds what is happening on the West Bengal and on basis of that that we will put the strategy there. We had a strong vodka 17:28 17 minutes, 28 seconds base there. So we will get the benefit of that. 17:32 17 minutes, 32 seconds So is it a open market or a regulator as of now? West Bengal. 17:36 17 minutes, 36 seconds No it's a open market. It's a open market right now. So they have a private details etc there. But um if there are 17:44 17 minutes, 44 seconds any changes which is going to happen then we will see accordingly. 17:50 17 minutes, 50 seconds And uh regarding the Bihar Bihar yes we will wait and watch. Before the prohibition we used to have a large 17:58 17 minutes, 58 seconds consumer wave in Bihar and it is a significantly populated state. So we will wait and watch in the case if anything happens in we will get the benefit of it. 18:10 18 minutes, 10 seconds Sir wishing you all the best for future quarters. Thank you. 18:16 18 minutes, 16 seconds Thank you. The next question is from the line of Kapoor from Invest. Please go ahead. 18:24 18 minutes, 24 seconds Yeah. Hi good evening. So I just had three questions. One was you know on the initial comments Adisha G on uh um on 18:32 18 minutes, 32 seconds the uh unlock uh you know because of the distribution expansion on the luxury portfolio. Uh my understanding was that a lot of this work you had already done. 18:41 18 minutes, 41 seconds Just wanted to get your sense on you know how much more can this benefit whether in terms of you know uh more outlets that you can still reach on the 18:50 18 minutes, 50 seconds on trade or maybe more product in those same outlets. So what's the potential still of that? Uh the second question 18:58 18 minutes, 58 seconds was on exports. I'm sure uh you know you would have taken some impact in the last 6 months because of tariffs etc. I just 19:04 19 minutes, 4 seconds wanted to kind of uh get your thought on how fast that segment can grow uh uh you know going forward and how much impact 19:13 19 minutes, 13 seconds it would have had in 26. And uh the third question is on the uh on the uh 19:19 19 minutes, 19 seconds margin bit you know the 100 to 125 basis points. Does it also take into account the fact that uh you are you already 19:27 19 minutes, 27 seconds including the fact that there will be an India UK FDA uh you know benefit for you possibly in the second half of this fiscal year. Those were my three questions. Thank you. 19:39 19 minutes, 39 seconds to answer your first question regarding the um the expansion to the various states and on trade I think um we see 19:49 19 minutes, 49 seconds that especially with Virasad Kashmir all this there's a huge scope of expanding it and on also what we had told about 19:57 19 minutes, 57 seconds two years back with our luxury portfolio has become a key focus area for Radico so we are adding outlets by the day and 20:05 20 minutes, 5 seconds this year brand advocacy is one of our most important initiative. We are planning to have about close 2,000 advocacy sessions on uh in the on trade. 20:16 20 minutes, 16 seconds So I think all this put together that is why we are confident that our uh luxury portfolio should grow by 25% in terms of 20:26 20 minutes, 26 seconds value from 475 crores and as far as sport goes I think Sep will answer that. 20:32 20 minutes, 32 seconds the RF in terms of the US tariffs at 10% it's not make or break especially for the luxury portfolio where the 20:40 20 minutes, 40 seconds difference on the retail end would be about5 to $6 a bottle and all so that's not substantial however the US market as 20:48 20 minutes, 48 seconds it is as you would have seen from all the other uh players as well whether in the alcob space or anything else is on a 20:57 20 minutes, 57 seconds slightly softer note so we are all hopeful it'll bounce back pretty soon and should not have any major impact on our luxury portfolio. 21:09 21 minutes, 9 seconds Regarding regarding the uh margin expansion as you said that UK India FDA 21:17 21 minutes, 17 seconds benefit so 125 basis point expansion is inclusive of all at the same time there 21:25 21 minutes, 25 seconds can be some pluses and some minuses. So we are conservative on our listing that uh some something goes on cost push side 21:34 21 minutes, 34 seconds and all that. So 125 basis point should be delivered uh given the current scenario. 21:43 21 minutes, 43 seconds Great. That's it for me. I'll come back for more. Thank you very much. 21:48 21 minutes, 48 seconds Thank you. The next question is from the line of Abijit Kundu from Anti-Shock Booking. Please go ahead. 21:56 21 minutes, 56 seconds Yeah, thanks uh for the opportunity and uh congratulations on a great set of numbers. Uh just a follow up on the you 22:04 22 minutes, 4 seconds know the previous question that uh to just clarify uh if uh I mean excluding 22:12 22 minutes, 12 seconds UK FTA and given the current environment uh uh uh Radico is looking at a 100 to 125 uh basis points improvement in 22:21 22 minutes, 21 seconds masses. Is that uh is that right? 22:27 22 minutes, 27 seconds So actually as we said with the current scenario I can't predict if it goes much earlier than what it is today with the 22:36 22 minutes, 36 seconds if LPG and other thing goes out of stock and we some of the units uh of glass bottle something disrupt with the 22:43 22 minutes, 43 seconds production and all that otherwise we're pretty confident because we see this should not happen and the geopolitical 22:50 22 minutes, 50 seconds situation also should be taken care of next 15 30 days and all that and we have a longstanding ing relationship with our 22:58 22 minutes, 58 seconds supply chain. So we're pretty confident about continuity of the business and uh given these circumstances and all we we 23:07 23 minutes, 7 seconds we we confident to deliver that until unless there is something very very drastically negative. 23:14 23 minutes, 14 seconds Okay. And sir uh what I understand is uh the uh Sithapur and Rampur distillery uh 23:22 23 minutes, 22 seconds 50% of it is uh you know bio biomass uh dependent and less dependent on LPG. So 23:31 23 minutes, 31 seconds on a overall basis I mean uh you know assuming I mean things are getting better but assuming that there are 23:40 23 minutes, 40 seconds issues with LPG uh and uh LPG supplies and then there and also uh that is one question. Second 23:49 23 minutes, 49 seconds so what happens in that scenario and second question is that u you know uh uh glass prices are you seeing any 23:56 23 minutes, 56 seconds inflation right now? I mean uh after your negotiations uh what is the and what is your 24:05 24 minutes, 5 seconds dependence on uh glass because a major part of it would be glass and then there is uh you know uh lot of this company 24:13 24 minutes, 13 seconds lot of uh alcoholic spirit companies have uh switched to hipsters and hence a dependence on uh pet uh I mean bottles. 24:24 24 minutes, 24 seconds So what could be the overall impact in the current scenario and if it increases from the current level u just just a 24:33 24 minutes, 33 seconds slightly a view on that actually your first point regarding the my power and fuel balancing and all that 24:42 24 minutes, 42 seconds so it is largely 90% of our power and fuel between uh in both the plants and 24:49 24 minutes, 49 seconds rampur is bofuel driven so I'm not at all depending dependent on the LPG. So 24:56 24 minutes, 56 seconds it takes care of about itself and the bofuel is locally available and there are boilers etc and turbine which 25:05 25 minutes, 5 seconds generates the power. So in both the plants we are self-sufficient on our captive basis. Your second question 25:12 25 minutes, 12 seconds regarding the glass as I said uh earlier also that we have a longstanding relationship with the glass 25:20 25 minutes, 20 seconds manufacturer. We don't foresee any any impact on our glass supply. At the same 25:27 25 minutes, 27 seconds time, there has been some inflation in the glass prices in the last month. 25:32 25 minutes, 32 seconds Around 15% of the glass price have got increased. We have factored into our cost uh this thing uh costing that and 25:43 25 minutes, 43 seconds uh after that also we're talking about uh the margin expansion. On your third point as the trend is going around and 25:51 25 minutes, 51 seconds Abisha can speak much more on that. Uh on the extra pocket pack it is a trendier pack and is gaining momentum. 25:59 25 minutes, 59 seconds So that is also reducing dependency on glass. So that is another feature which is coming in the uh demand point of view on consumer preference point of view. 26:12 26 minutes, 12 seconds And we are promoting that also. 26:16 26 minutes, 16 seconds Understood sir and uh on a topline front you know uh when I look at your uh I mean growth and the sustainability of 26:25 26 minutes, 25 seconds that um if we have to look at a 15 to 16% at least uh revenue growth for the 26:32 26 minutes, 32 seconds next few years uh and you know about a 11 to 12% uh volume growth uh then um a 26:41 26 minutes, 41 seconds significant part of that uh would come from uh magic moments vodka uh after 26:47 26 minutes, 47 seconds dark uh uh 8:00 p.m. back I don't know uh how that is moving on and and there 26:54 26 minutes, 54 seconds is a part of it which old admiral where you were uh you know where where you got benefited in Andra u so uh so if you 27:03 27 minutes, 3 seconds have to you know uh look for this next two years how would uh the scenario be in terms of your uh brand growth I I 27:12 27 minutes, 12 seconds don't want any figures but where which would be the brand that would that would drive the larger growth one is your uh 27:20 27 minutes, 20 seconds you know 475 crores of uh luxury portfolio which will grow at about 20 25% that we understand very well and 27:27 27 minutes, 27 seconds that is doing very well uh and and what about the other portfolio and and yeah and in addition to that 27:35 27 minutes, 35 seconds sorry uh uh how have you seen the uh MML you know panning out so has it settled 27:43 27 minutes, 43 seconds down uh because that has impacted a part of Radico's volumes as well so How do you see that planning out going ahead? 27:54 27 minutes, 54 seconds Yeah, that's fine. 27:55 27 minutes, 55 seconds Uh if you see Yeah, if you see last year a growth of PNA has been 28%. 28:03 28 minutes, 3 seconds And uh Wodka definitely what we are seeing is a shift towards the white spirits 28:10 28 minutes, 10 seconds like if you see total market share of the white spirit in India is about 4 and a half%. Whereas globally it is 28 to 28:18 28 minutes, 18 seconds 29%. So we have a still a long way to uh get that conversion and I think what we 28:25 28 minutes, 25 seconds are seeing with the innovations of the flavor etc. a lot of consumer are now shifting to the white spirit. So I think 28:32 28 minutes, 32 seconds u in the times to come or in the current year which we are already seeing magic will be a big driver of our growth 28:40 28 minutes, 40 seconds number one number two after dark also has grown very well it has grown by 62% 28:46 28 minutes, 46 seconds and we feel that it is gaining traction so the growth will come from there also and we had done a repackaging or a 28:55 28 minutes, 55 seconds retransformation of 8m black in the second half of last year and this quarter we grew by about close to 60%. 29:04 29 minutes, 4 seconds So I think growth is coming from all these three angles. So we are very confident that our PNA category volume 29:11 29 minutes, 11 seconds growth for the next year will be very understood. Thanks. Thanks. That's it for my s. 29:24 29 minutes, 24 seconds Thank you. The next question is from the line of Mihul Desai from GM Financial. Please go ahead. 29:32 29 minutes, 32 seconds Yeah. Hi sir, congrats on a great set of numbers. Uh firstly just wanted to uh while you did uh allude to vodka segment 29:39 29 minutes, 39 seconds uh and PNA segment being seeing a strong growth. Uh how should one look at the realization growth uh here because 29:47 29 minutes, 47 seconds obviously the luxury portfolio is is also growing pretty fast. Uh do you see this uh realization growth of you know 29:54 29 minutes, 54 seconds low single digits that we saw in FI26 for PNA? Can that uh be uh that can that 30:00 30 minutes go to can can that also increase and secondly how do we look at the regular seg regular segment growth on a steady state basis. 30:10 30 minutes, 10 seconds So on the realization front as our P&A and especially luxury is growing faster than the even PNA. So we extract that 30:19 30 minutes, 19 seconds realization and volume and value delta will be in the range of 300 to 400 basis 30:26 30 minutes, 26 seconds points as an aggregate basis. And as far as your second question 30:34 30 minutes, 34 seconds on the regular regular segment regular segment in my opening remark I said is because of some policy and high base this time it has 30:43 30 minutes, 43 seconds reown in Q4 however in the full year we grown by 30% on the regular side also 30:50 30 minutes, 50 seconds but this year we expect in the range of 3 to 5% growth in regular category. 30:56 30 minutes, 56 seconds Okay. Yeah, that's a volume, right? Yeah, volume. 31:01 31 minutes, 1 second Yeah, got thank you. That's that's all from Thank you. The next question is from the 31:10 31 minutes, 10 seconds line of Rahul Agarwal from Incanite Asset. Please go ahead. 31:15 31 minutes, 15 seconds Yeah. Hi sir, good evening. This is Rahul Aaral of ECI asset. Sir, uh the question is related to you know earlier 31:21 31 minutes, 21 seconds questions asked on growth. uh 20% TNA volume growth implies about 3 and a half million cases roughly additional uh 31:30 31 minutes, 30 seconds similar question what the earlier analyst asked on know which categories and brands will will contribute you mentioned magic moments after dark 8 31:38 31 minutes, 38 seconds black repackaging uh are these three uh you know category or brand going to be similar to contribute this three and a half million cases is that is there 31:46 31 minutes, 46 seconds enough market for that so that's first question and secondly in terms of you know capacity related question to the growth outlook 31:54 31 minutes, 54 seconds support this 20% growth. Uh you know you said your capex is largely you know maintenance and optimization. Uh so how 32:02 32 minutes, 2 seconds are we placed in terms of inhouse capacity across uh you know material packaging bottling printing stuff like that. You just highlight uh do we have 32:10 32 minutes, 10 seconds enough to support this uh you know give more color on this 20% growth please? That's the first question. 32:18 32 minutes, 18 seconds Yeah. So the first question is regarding the 20% category at 20% growth on the PNA side. Yes, you are right that these 32:26 32 minutes, 26 seconds are the brands which will take it like uh uh magic family is growing more than 22% in as a whole and last quarter 28% 32:35 32 minutes, 35 seconds new flavors are adding lot of strength to the magic growth. Then after dark which is a large segment in large 32:42 32 minutes, 42 seconds segment it is an industry of 75 million cases plus. So that is also adding Royal Run board the another brand which is 32:50 32 minutes, 50 seconds also growing by more than 50%. And as a bouquet as some of the brands are still in a very very nent stage and all that 32:58 32 minutes, 58 seconds we are confident to deliver 20% growth on as a category full categories as a P& category. Second question is regarding 33:07 33 minutes, 7 seconds the capacity. So actually our 60 65% of our capacity is outsourced by lease 33:15 33 minutes, 15 seconds arrangements etc across India and 30 to 35% is being handled by us in our own 33:22 33 minutes, 22 seconds plants. So we we we we believe in outsourcing that with a quality tie up arrangements etc. So we are confident 33:30 33 minutes, 30 seconds and the capex as I said will be in the range of 150 to 175 crores which will be largely on my internal uh capacity 33:39 33 minutes, 39 seconds expansion and optimization etc. So we will be doing that mix of that but uh 33:46 33 minutes, 46 seconds there's the capacity is not a constraint for the growth. 33:52 33 minutes, 52 seconds Got it sir. And this entire 60 65% outsourced arrangements you know from a supply chain perspective you know they 33:59 33 minutes, 59 seconds could face you know some hiccups in terms of whatever they are sourcing components and material from of course gas is an issue and you know could have 34:06 34 minutes, 6 seconds some supply hiccups uh you know in terms of our discussions with them uh that al this this outlook in terms of 20% growth 34:14 34 minutes, 14 seconds also accounts for uh you know all the supplies on time to the vendors as well right 34:21 34 minutes, 21 seconds as far as the unit goes all the material is procured by radico we are only converting it so all the raw material is 34:30 34 minutes, 30 seconds our our so we don't foresee any problem in that got it l and just lastly on employee 34:39 34 minutes, 39 seconds cost uh just as a directional uh when I look at you know over the last four five years uh this this number actually has 34:46 34 minutes, 46 seconds grown you know uh much lower than what topline growth radical has seen overall from a system Of course, we've been investing into you know uh people and 34:54 34 minutes, 54 seconds we've been training uh you know people inside the company itself but going forward do you still think this 15% cost 35:02 35 minutes, 2 seconds gagger for staff cost is you know is enough to sustain this 20 25% kind of PNA outlook over the next few years 35:11 35 minutes, 11 seconds yeah our uh internal team is very strong and second is the operating leverage is 35:18 35 minutes, 18 seconds coming into play as your as as because as the turnover is increasing we do not require the same number of manpower. So 35:27 35 minutes, 27 seconds the operating leverage is kicking in which is helping our margins also. 35:33 35 minutes, 33 seconds So it should continue the similar way as what we have seen so far over the last four five years right. Yes. Yes. Yes. 35:39 35 minutes, 39 seconds Okay. Perfect. Uh thank you so much and best wishes for the next year. 35:47 35 minutes, 47 seconds Thank you. The next question is from the line of Narin Naredi from Naredi Investment Private Limited. Please go ahead. 35:55 35 minutes, 55 seconds Uh hello, am I audible? Yes ma'am. 36:00 36 minutes Uh congratulations and thanks for the opportunity. So my first question is giving uh rising health awareness. How 36:08 36 minutes, 8 seconds are you adopting uh your portfolio like premium, ready to drink, low alcohol to capture Gen Z consumers and also 36:16 36 minutes, 16 seconds diversifying the portfolio which will reduce the dependence on uh Indian excise policy. That is my first question. 36:30 36 minutes, 30 seconds As far as the Jenzi goes, you know, the white spirits is what the GenZ's prefer and that is where our innovation of the different flavors of vodka is coming 36:38 36 minutes, 38 seconds into play and that is helping us to get the Jenzi into the white splits. What I told earlier, we see this white spirits 36:46 36 minutes, 46 seconds expanding in lot of states now. So I think uh that is the trend we are seeing with the Genesis. As far as low 36:54 36 minutes, 54 seconds alcoholic or RTD goes, as of now, we don't have any major plans to get into it. 37:01 37 minutes, 1 second Yeah. Because uh these days what I observe personally is uh Jenz's focuses on like they are very careful about what 37:09 37 minutes, 9 seconds they're drinking and they're limiting uh their like they don't drink too much also. They think and then they act. So 37:17 37 minutes, 17 seconds that was my concern like uh how are we thinking to modify our portfolio uh into 37:24 37 minutes, 24 seconds non-alcoholic or low alcoholic beverages so that we can benefit in future that was my concern and 37:32 37 minutes, 32 seconds you're absolutely right the jenzi what they are doing is everyone is like health consscious responsible drinking 37:39 37 minutes, 39 seconds etc so they are drink they drink less but they want to drink the finest that is why you see the PNA category is growing across Ross India and that is that is the main trend. 37:51 37 minutes, 51 seconds Okay. So like uh no future plans of getting into uh another like low alcoholic drink like many of your 37:59 37 minutes, 59 seconds competitors are also entering into those segments. So you don't have any uh plan to enter those segments right in future. 38:11 38 minutes, 11 seconds Hello. No we don't have any plans as of now. 38:16 38 minutes, 16 seconds Okay. And another question is like uh Rampur Indian single malt and Jess crafted and magic moments like these are 38:24 38 minutes, 24 seconds getting a lot of traction uh in global market like internationally also. So uh like knowing that uh our share uh like 38:32 38 minutes, 32 seconds international contribution uh to topline is around 8 to 9% only. So going forward 38:40 38 minutes, 40 seconds are we looking to penetrate even in a better way uh the global market scenario? How are we strategizing that forward? 38:49 38 minutes, 49 seconds Yeah, the international market is a very important uh strategic market for us and it's not only the international market 38:56 38 minutes, 56 seconds but even the global travel retail that's that's very important. We are currently in 50 plus airports and our target is to 39:05 39 minutes, 5 seconds cross 100 airports in quick time. In terms of the share of international business in the overall it's thanks to 39:14 39 minutes, 14 seconds our domestic business which is growing at a very very fast pace. The share keeps coming down so we not complaining about it. 39:25 39 minutes, 25 seconds All right. All right. Uh that was my question and thank you and I really like this like this is the first time I'm attending uh the investor call and uh 39:33 39 minutes, 33 seconds you're really doing a great job and all the best for the future. Thank you. 39:39 39 minutes, 39 seconds Thank you. The next question is from the line of Yes Patil from Talal and Procha. Please go ahead. 39:46 39 minutes, 46 seconds Uh yeah. Hi sir. Uh thank you for the opportunity. uh so you in Q3 you flagged the Maharashtra industry volume down by 39:54 39 minutes, 54 seconds around 20%. What's ML policy and said you will launch MML to your RNV joint venture in January. So how is this R&B 40:03 40 minutes, 3 seconds joint venture perform since launch and what is your current market share in Maharashtra and do you see the market uh 40:10 40 minutes, 10 seconds recovering toward the original 2.4 4 million cases per month in Maharashtra. 40:18 40 minutes, 18 seconds You see as far as Maharashtra is concerned, Maharashtra we have uh you know sellency of around 3 to 4% of our 40:26 40 minutes, 26 seconds overall business. Uh yes after the MML introduction uh the industry industry has gone down you know it has gone down by 20 25%. 40:37 40 minutes, 37 seconds uh so gradually MML is stabilizing and we hope so that you know IMFL in the over a period of time should come back 40:45 40 minutes, 45 seconds to the uh you know in the normal position. Um and since we are uh cutting 40:52 40 minutes, 52 seconds vodka category and above there so premium and above is a stable for us. 41:00 41 minutes Uh yeah sir thank you and all the best for your Thank you. The next question is from the 41:09 41 minutes, 9 seconds line of Vinay Raal from Choice International Equities. Please go ahead. Yeah uh thanks for the opportunity sir. 41:17 41 minutes, 17 seconds U I had couple of questions but they are more or less answered. So thank you so much. 41:27 41 minutes, 27 seconds Thank you. The next question is from the line of Draj Mishri from Jeff. Please go ahead. 41:36 41 minutes, 36 seconds Yeah. Hi, good afternoon sir. Uh sir, can you spend some time on Karnataka policy? How do we read that and what 41:44 41 minutes, 44 seconds kind of price uh decline or hike we can expect across range of products? 41:53 41 minutes, 53 seconds See as as we have said earlier that Karnataka is a progressive Karnataka is on the progressive march. So as far as 42:02 42 minutes, 2 seconds excise is concerned they have taken this step last year also where they have rationalized the price of EM grants and 42:10 42 minutes, 10 seconds our grants like Rampur Single Mess Jin Royal Dandur Shangam etc has been 42:17 42 minutes, 17 seconds benefited in the larger way and other other brands of the industry has also been benefited. It's it's a cosmo market at the end of the day. So it has lot of 42:25 42 minutes, 25 seconds consumption. Now in the second step also government al also thinking on the similar line but at the same time you 42:33 42 minutes, 33 seconds know since the policy is yet not out. So we cannot say that but as far as market and other things are concerned we can say that they are thinking on that line 42:41 42 minutes, 41 seconds and they have seen a success of you know premium and above category uh you know increase. The overall salency of the 42:49 42 minutes, 49 seconds premium and above category has been increased in the last decision of that. 42:54 42 minutes, 54 seconds So definitely they will look forward for rationalizing the brands further. 42:59 42 minutes, 59 seconds Got it. Got it. And uh sir uh what would be the margin uh for non IMFL business 43:06 43 minutes, 6 seconds in this uh for the full financial year and how do we see the growth as well as margin profile of nonf business going ahead? 43:18 43 minutes, 18 seconds The margin in the IMFl business is around 20% plus 20 21%. For full year and nonFL it is in the range of 9%. 43:31 43 minutes, 31 seconds And uh how do we expect growth uh in non IMFL business? 43:38 43 minutes, 38 seconds Nonfl business is growing at 7 to 8%. uh this thing this is a natural growth of 43:45 43 minutes, 45 seconds the industry as far as the bulk split is concerned that will in due course of time start being consumed uh by us 43:54 43 minutes, 54 seconds captively so that will get reduced so proportion as of now also the IMFL is 44:01 44 minutes, 1 second constituting around 70 to 75% of the overall overall salency of the top line 44:08 44 minutes, 8 seconds so we'll see a gradual shift to IMFL from non IMF Okay. Okay. And uh so last question is 44:18 44 minutes, 18 seconds on keex that now that we will become debtfree uh in FI27 and already you have announced that 44:25 44 minutes, 25 seconds minimum 20% uh would be the dividend payout policy. Uh how do we see the incremental uh capital allocation going 44:34 44 minutes, 34 seconds ahead? uh would we do further capex or uh would be looking for uh inorganic growth or acquisition? How do we see on capital allocation? 44:48 44 minutes, 48 seconds So as far as the the first step we have taken on this is to have a minimum payout of 20%. And in due course of time 44:58 44 minutes, 58 seconds with the time passes and the availability of cash generation and free cash flow available it will be looked into. However, if there is an 45:05 45 minutes, 5 seconds opportunity which gives us more than 25 20 to 25% ROC, we'll be definitely 45:12 45 minutes, 12 seconds looking at that. But uh the point is we believe in a organic growth rather than 45:19 45 minutes, 19 seconds an inorganic growth. So as far as the acquisition or anything is concerned that is for at this point of time is being ruled out. 45:29 45 minutes, 29 seconds Okay. Okay. Uh sorry uh but I am uh I don't know whether this question was asked or not. Uh so in our assumption of 45:38 45 minutes, 38 seconds 125 bits of margin expansion do we take any benefit from UK India FDA trade? 45:45 45 minutes, 45 seconds Yeah it's inclusive of all because there will be some pluses and some minuses. We can't predict what kind of the global 45:52 45 minutes, 52 seconds and geopolitical situation arise. So taking into account all these things I think we're confident to deliver around 125 business point improvement. 46:01 46 minutes, 1 second Okay. So that includes UK India FBA trade benefit as well. Thank you sir. Yeah. Yeah. 46:08 46 minutes, 8 seconds Thank you. The next question is from the line of Karan Kam from Choice International Equities. Please go ahead. 46:16 46 minutes, 16 seconds Uh hello sir. Thank you for the opportunity and uh congratulations on a really great set of numbers. So first question I had is what kind of pricing 46:25 46 minutes, 25 seconds power uh do we have across markets at least our top markets and if you can help me with what our top markets are in 46:32 46 minutes, 32 seconds terms of salience and when can we actually do the revisions are there any legal restrictions uh or not on pricing 46:39 46 minutes, 39 seconds divisions uh secondly uh we say I really appreciate the goal of reaching the 46:46 46 minutes, 46 seconds thousand cr and we are saying 25% uh ker to reach it in 3 years. Uh what 46:54 46 minutes, 54 seconds kind of brands are our high conviction brands and what kind of geographies are you betting on? 47:04 47 minutes, 4 seconds So your first question is regarding the pricing power. So as you are aware that uh state excise policies generally when 47:13 47 minutes, 13 seconds the industry represent about the uh reason for seeking the price increases and all that in the scenario the state 47:22 47 minutes, 22 seconds government consider now is positively because their concern is also the revenue and all that. uh as we said that 7 to eight states has already given. 47:32 47 minutes, 32 seconds This is a continuous process which uh the industry associations keep doing with the state governments and some of 47:40 47 minutes, 40 seconds the talks are still on and all that because of the cost being faced by the uh industry. So that is I can't say that 47:49 47 minutes, 49 seconds which are the states but yes uh it is an ongoing process. Regarding your second question regarding 47:57 47 minutes, 57 seconds uh sir part to luxury market uh what are we sort of betting on what are our top brands that we are focusing on uh for 48:06 48 minutes, 6 seconds turning 475 into thousand crores uh and uh I'm sure we'll show luxury as a separate line item as well when we reach 48:13 48 minutes, 13 seconds there. So what are we betting on in terms of brands and geographies? 48:19 48 minutes, 19 seconds Our our guidance first of all is for the next year 25% not for 3 years. So next year our guidance is 25% after that 48:26 48 minutes, 26 seconds we'll see but we are very confident on our luxury portfolio because we are seeing growth coming from everywhere. 48:35 48 minutes, 35 seconds Okay. So nothing no particular uh product or category that we are betting on 48:42 48 minutes, 42 seconds you know like Rampur Indian single mold the expressions of Rampur the Virat Indian single malt the spirit of Kashmir may royal van all these brands. 48:53 48 minutes, 53 seconds Okay got it sir and sir if you can just list out uh what are top three states and what salient we have in those states that would be very helpful. 49:04 49 minutes, 4 seconds So the top three states are Uttar Pradesh, Andhra Pradesh and uh Rajasthan and we are actually 49:14 49 minutes, 14 seconds pretty well spread out on our salency north uh south everywhere I think radio is growing but these are the three big states. 49:25 49 minutes, 25 seconds Okay, thank you sir and all the best for the future. 49:29 49 minutes, 29 seconds Thank you. The next question is from the line of Nitani from Incrate Research. Please go ahead. 49:36 49 minutes, 36 seconds Hello sir. Um one I would like to know given that MML is right now established 49:43 49 minutes, 43 seconds in Maharashtra and stabilizing and uh you have a JV there which is allowing you to participate within that industry 49:51 49 minutes, 51 seconds and you've already lined up uh some pretty eye-catching products and given that the competitors within set segment 49:58 49 minutes, 58 seconds would not always be backed by large uh companies such as yourself given that do you expect the JV in Maharashtra uh to 50:08 50 minutes, 8 seconds take a substantial portion of this increasing market. 50:16 50 minutes, 16 seconds We are aiming about 10 to 15% of the MML category and we just launched it a couple of months back and the response to the brand is quite uh encouraging. 50:26 50 minutes, 26 seconds Yes. So that is definitely they have uh I've seen the products within the range and of course there is no uh debate that 50:35 50 minutes, 35 seconds your products stand out. um across the line you know in that category and given that this distribution strength you 50:42 50 minutes, 42 seconds could and backing of the main company the growth of course there is going to be substantially high if this um entity 50:49 50 minutes, 49 seconds stabilizes now over here given that the growth is going to be coming from this segment and that's the market you are aiming at uh is there is there more 50:57 50 minutes, 57 seconds investments going to be made in the JB no the JB is sufficient 51:05 51 minutes, 5 seconds okay even for this uh growth that sorry even for this market share grab that you're looking at yeah absolutely because um uh it's more 51:15 51 minutes, 15 seconds of creating the brand and the distribution leverage and uh the JB itself is throwing lot of cash so I 51:22 51 minutes, 22 seconds think uh there's no requirement of any investment there understood understood so next question 51:29 51 minutes, 29 seconds on the uh up uh side UP IML we were we are always in top two we sometimes Number one, number two. But financial 51:37 51 minutes, 37 seconds year 26, where have we ended? Have we ended it at number one position? Number two position officially? 51:46 51 minutes, 46 seconds We are number one. 51:48 51 minutes, 48 seconds Okay. Currently we have moved to number one. Okay. And within the space of UPIM, the UPML segment um the growth there and 51:56 51 minutes, 56 seconds uh how much market are we aiming to capture there? First of all, is the segment itself as exciting as the state policy makes it to be and uh are the 52:04 52 minutes, 4 seconds consumers also as excited about this segment? 52:11 52 minutes, 11 seconds I think a market share there is about close to 26 25 26%. 52:16 52 minutes, 16 seconds And uh we are aiming at the normal growth what the market will be having. 52:21 52 minutes, 21 seconds You're not looking at a normal growth there. 52:25 52 minutes, 25 seconds Understood. And in particular on the UPML segment the excitement is there as the state makes it to be 52:34 52 minutes, 34 seconds consolidated we are talking about 24 25% market share in UPML and UPCL understood undersity 52:43 52 minutes, 43 seconds our objective and our focus area core business is on side which continues to grow in very very strong double digit 52:52 52 minutes, 52 seconds 20% is our guidance and we continue to focus on that across markets Understood sir. Thank you. 53:03 53 minutes, 3 seconds As there are no further question from the participants, I now hand the conference over to the management for closing comments. 53:12 53 minutes, 12 seconds Yeah. So the current environment reinforces the strength and resilience of radio kitan business model. Strong 53:20 53 minutes, 20 seconds operating performance, margin expansion and improved return ratio and healthy cash flow generation respect the quality 53:28 53 minutes, 28 seconds of our growth and impact of the disciplined execution. With a differentiated premiumbled portfolio, 53:37 53 minutes, 37 seconds a robust balance sheet and continued focus on financial discipline. We are well positioned to navigate near-term 53:44 53 minutes, 44 seconds uncertainties and sustain our profitable growth trajectory. We remain confident in road road ahead and committed to 53:53 53 minutes, 53 seconds creating long-term value for our stakeholders. Thanks for joining us today. I look forward to connecting with you next project. Thank you. 54:03 54 minutes, 3 seconds Thank you on behalf of DAM Capital Advisor. That concludes this conference. 54:08 54 minutes, 8 seconds Thank you for joining us. You may now disconnect your lines.