Radico Khaitan Share Price Target at Rs 3,000: Motilal Oswal
Motilal Oswal has initiated coverage on Radico Khaitan with a bullish outlook, emphasizing the company's strategic pivot toward premiumization in the Indian Made Foreign Liquor (IMFL) space. With a dynamic portfolio across whiskey, vodka, gin, rum, and brandy, and substantial investments in product innovation and backward integration, Radico is positioned for robust multi-year growth. Despite industry-wide margin pressures, Radico’s strong free cash flows, pan-India distribution, and expanding global footprint support its valuation. The firm sees 16% revenue CAGR and 30% EPS CAGR over FY25–28E, justifying a steep valuation of 60x FY27E EPS, leading to a target of Rs 3,000.
Strong Brand Portfolio Backed by Decades of Distilling Heritage
Radico Khaitan, founded in 1943, is among India's oldest IMFL manufacturers. Formerly Rampur Distillery, the firm transitioned from bulk spirits supply to owning some of India's most recognizable liquor brands, including 8PM, Magic Moments, Royal Ranthambore, and Rampur Single Malt.
The company reported FY25 net revenue of Rs 48.5 billion, with IMFL volumes reaching 31 million cases. Its focus on premiumization has reshaped its product mix, with Prestige & Above (P&A) segment volumes hitting 15 million cases—about 41% of IMFL sales.
Premiumization: The Core Growth Driver
Radico commands an 8% market share in India's P&A IMFL segment. Its vodka leadership is unmatched, holding 85% of the P&A vodka industry, and the whiskey segment is gaining momentum.
Premiumization is central to Radico’s strategy. The firm has built an aspirational product ladder, from Rs 500 bottles to those above Rs 8,000. Recent launches like Rampur Single Malt and Jaisalmer Gin exemplify its luxury push.
Over FY25–28E, P&A volume is expected to grow at a 15% CAGR, while P&A revenues should clock a 21% CAGR.
Financial Growth Trajectory Remains Strong
Radico's key financials over the forecast horizon are:
| Metric | FY25 | FY26E | FY27E | FY28E |
|---|---|---|---|---|
| Revenue (Rs Bn) | 48.5 | 56.6 | 65.2 | 75.1 |
| EBITDA Margin (%) | 13.9% | 15.1% | 15.6% | 16.2% |
| EPS (Rs) | 25.8 | 36.7 | 46.3 | ? |
| RoE (%) | 12.8% | 15.9% | 17.3% | 18.4% |
Motilal Oswal expects a 16% revenue CAGR and 30% EPS CAGR from FY25–28. EBITDA margin is projected to improve steadily with easing raw material costs and product mix benefits.
Operational Excellence Despite Industry Headwinds
Margins were impacted due to inflation in ENA and glass. Despite this, Radico maintained momentum by shifting toward in-house production and cost controls.
Gross margin is expected to rise by 100–150 bps to ~44%, and EBITDA margin to 16% by FY28. Sitapur’s new 350 KLPD distillery and backward integration are expected to contribute meaningfully.
Pan-India Distribution and Premium Market Penetration
Radico has expanded its reach to over 100,000 retail outlets and 10,000 on-premise locations. Key markets such as UP, AP, Telangana, and Karnataka are now driving growth.
In Andhra Pradesh, Radico’s market share rose from 10% to 23% in FY25, while Karnataka’s premium segment is rebounding after a duty cut. The company is also strengthening presence in Telangana and Maharashtra—markets that prefer premium spirits.
India-UK Free Trade Agreement: Strategic Tailwind
The FTA finalized in May 2025 slashes whisky and gin duties from 150% to 75% immediately, and 40% over a decade.
Radico is poised to benefit, particularly for premium brands that rely on imported spirits. The expected savings on input costs is estimated at Rs 750 million, which will enhance profitability in luxury SKUs.
Global Expansion and CSD Segment Strength
Exports contribute 8–9% of Radico’s revenues, and the company sells in over 100 countries. Premium brands like Rampur and Jaisalmer are gaining strong international traction.
The Canteen Stores Department (CSD) accounts for 11–12% of Radico’s revenue, aided by tax advantages. Brands like Royal Ranthambore have performed exceptionally well in this channel.
Capital Allocation and Balance Sheet Health
Gross debt has been reduced from Rs 8.2 billion in FY16 to Rs 6.3 billion in FY25. Continued free cash flow generation is expected to drive further deleveraging.
RoIC is forecasted to improve from 13.1% to 21.2% during FY25–28.
Valuation and Target Price
Motilal Oswal values Radico Khaitan at 60x Jun’27E EPS, setting a target price of Rs 3,000 per share.
| Company | CMP (Rs) | Target (Rs) | FY25 P/E | FY26E P/E | FY27E P/E |
|---|---|---|---|---|---|
| Radico Khaitan | 2,453 | 3,000 | 95x | 67x | 53x |
| United Spirits (UNSP) | 1,578 | 1,650 | 79x | 70x | 63x |
Investment Risks
Key downside risks include:
Unexpected inflation in ENA or glass input costs.
Higher excise duties across states.
Rising competition in the premium segment.
Bottomline for Investors
Radico Khaitan’s deep-rooted legacy, brand equity, and aggressive premiumization strategy place it in a unique position within the alco-bev landscape. With enhanced manufacturing capacity, pan-India reach, and a luxury-focused product pipeline, the company looks well-equipped to deliver substantial shareholder value. Motilal Oswal’s BUY rating and Rs 3,000 target price reflect high confidence in its mid-term earnings trajectory.
