Radico Khaitan Q3 PAT drops 26% YoY to Rs 57 cr

The liquor maker's standalone net profit tumbled 25.6% to Rs 57.05 crore in Q3 FY23 as against Rs 76.71 crore recorded in Q3 FY22.

Net revenue from operations was at Rs 792.15 crore during the quarter, up 4.7% from Rs 756.57 crore reported in the corresponding quarter previous year.

Total Indian Made Foreign Liquor (IMFL) volume growth was relatively flat whereas Prestige & Above category volume grew 14.1%. But for the rationalization of volumes of certain brands, total IMFL volume growth would have been higher. Prestige & Above net revenue growth was 19.1% compared to Q3 FY22. IMFL sales value accounted for 80.1% (versus 81.9% in Q3 FY22) of the net revenue from operations.

Profit before tax dropped 24.1% year on year to Rs 76.43 crore in the quarter ended 31 December 2022.

EBITDA declined 18.8% to Rs 96.4 crore in Q3 FY23 as against Rs 118.7 crore posted in Q3 FY22. EBITDA margin reduced to 12.2% in Q3 FY23 as compared to 15.7% reported in the same period last year.

Gross margin during the quarter was at 41.3% compared to 41.6% in Q2 FY23 and 45.5% in Q3 FY22. On YoY basis, continued commodity inflation resulted in gross margins compression, particularly in the non-IMFL business where we have recently received price increases. Given a favorable product mix change, impact of cost push on the gross margin of the IMFL business was mitigated to a large extent.

Although, on a sequential basis, the company has experienced stabilizing trend in certain commodities, overall commodity scenario still remains volatile, it added.

Radico Khaitan said that its strategy is to continue to make prudent marketing investments over existing core brands and new launches to sustain the growth and market share. During 9M FY2023, advertising and sales promotion (A&SP) as % of IMFL sales was 5.1% as compared to 4.9% in 9M FY2022. On a quarterly basis, the amount may vary but we expect to maintain A&SP spend around 6% to 8% of our IMFL revenues to be able to drive the sales momentum.

The company's net debt stood at Rs 426.7 crore, an increase of Rs 310.7 crore after capex on new projects of Rs 471.9 crore since March 2022.

Dr. Lalit Khaitan, chairman & managing director said, Radico Khaitan has delivered another quarter of a consistent financial performance driven by a strong premium volume growth, a robust brand portfolio and excellent execution capabilities. During January 2023, we have successfully commissioned the dual feed plant at Rampur within the committed capex estimate and timelines. As we continue to make strides on our premiumization journey, the availability of additional grain based ENA will strengthen our value proposition.

He further added, We remain committed to our long term strategy of focusing on premiumization, along with managing our business with agility and driving backward integration efficiencies. While the raw material scenario still remains volatile, we have seen early signs of deflation in certain commodities. Furthermore, we have recently received price increases in the non-IMFL business in the state of UP which will hold us in good stead in the next fiscal year.

Abhishek Khaitan, managing director said, Driven by operational excellence and consumer-centric approach, our premiumization strategy continues to deliver strong results. During the nine months of FY2023, our Prestige & Above category brands have shown robust growth including core brands such as Magic Moments Vodka and Morpheus Brandy where YTD volumes have surpassed the full year numbers of FY2022. We are also pleased to commence the bottling operations at the Sitapur plant in January 2023 which is the first phase of our green field project. It positions us strongly to capitalize on the future growth opportunities in the branded business.

Radico Khaitan is one of the oldest and the largest manufacturers of Indian Made Foreign Liquor (IMFL) in India.

Shares of Radico Khaitan were down 0.16% to Rs 1,117.10 on the BSE.

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