Not to sound too pessimistic… but even a PAT of 160cr looks high. TTM PAT is 125Cr, which also includes 29Cr extraordinary profit from sale of land (in Q3FY24), so somewhere around 140cr (translates to 50-55Cr for next two quarters) for FY24 should be fine.
Disc: Invested, views are biased.
Q3FY25 PAT degrew by 50% on yoy basis and revenue is constant
Q3FY24 had other income. PAT has increased on YOY basis.
there was a tax reversal of 29 Crs which is showing up in last years results and which is why the comparison is incorrect
PBT before exceptional items at Rs 36.2crs up 32% YoY. Market is ignoring the Rs29 crs exceptional item in last year’s numbers and having a knee jerk reaction. Results are good.
Yes, Expected better following the festive season but a lot more is yet to happen. Q4 also has many weddings this year. Let’s see how it unfolds.
Against a 7% increase in total revenues, the gross profits increased by 31%.
Distillery segment was the sole positive contributor to company profitability. The segment revenue increased by 18%, gross margins improved from 64% to 72% indicating better realizations, and profit increased by 37%.
Overall, the story is shaping up well… need to see if there is unserved export demand that’ll be fulfilled via the capex that comes onto steam in FY26.
Assuming FY26 is another 30-40% growth on the EBIT of distillery segment, we will have the following scenarios. Overall, the stock can still give 50-60% in next year if the multiples converge a little and margins are beyond my expectation (likely with lux portfolio)
| 30% | 35% | 40% | |||
|---|---|---|---|---|---|
| Distillery Segment | 9MFY25 | FY25E | FY26E | FY26E | FY26E |
| Sales | 488 | 688 | 894 | 929 | 963 |
| EBIT | 127 | 182 | 250 | 279 | 308 |
| Margins | 26.0% | 26.4% | 28% | 30% | 32% |
| Valuation | 7030 | 7030 | 7030 | 7030 | 7030 |
| EBIT multiple | 55.4 | 38.7 | 28.1 | 25.2 | 22.8 |
| Radico | Diageo | ||||
| EBIT TTM | 491 | 2001 | |||
| Mcap | 30682 | 105444 | |||
| Multiple | 62.5 | 52.7 |
Note: I’ve assumed another 5% LC on the stock tomorrow and computed the valuation accordingly. I’m guessing the stock will now settle at around 690 where mcap would be around ~6300 Crs
How do you see QoQ results ? No Diwali effect ?
i think they are maxxed out and only selling Indri at higher prices, which are driving margin. it’s safe assumption now that next quarter will/should be similar to Q3 as well.
No. Wrong assumption . Q4 last year had no exceptional items like Q3 . So even similar sales should result in near to 5 rupee EPS next Quarter.
And where did you get the price hike idea ? It sales at same prices in Kolkata atleast as last year . Also , volume cant be same as this year they are selling in the military paramiltary canteens which they did not do last year .
Q4FY24 had sugar business contributing 100 cr, whereas distillery revenues are 185-205 cr. Since profits are going up but topline for distillery remaining the same, it can only come from product mix and higher prices of Indri like diwali edition etc.
Not necessary, the country liquor segment can simply degrow and revenue shortfall can be made up by Indri, which continues to go bigger. Doesn’t have to be a price hike on Indri.
If you compare Q2 and Q3 of this year, something similar might have happened… overall sales on a QoQ basis are flat, yet the QoQ EBIT growth is around 15-20% - has to be because of higher Indri & Camikara sales & maybe degrowth of the mass segment.
Q4 is likely to be higher than Q3, the extent of growth is the only question. If they do 200-220 Cr. and around ~70 Cr of EBIT, their full-year EBIT for the distillery segment will be around 200 Cr - pretty good I would say.
Though, I do think that scale up from here on depends on new product launches and their success. It’s been 1+ year without any product launch and maybe something might come up in next few quarters.
Unrelated, but here is what Radico says about the lux segment:-
Piccadily’s distillery sales are 488 Cr. in 9MFY25 and I think it should be a safe bet to say that around 50% or around 244 Cr is from Indri + Camikara alone.
Says a lot about the inherent strength of Indri & the segment in general.
Investor presentation is not giving much information. They should have at least put some dates for these expansion plans. Earlier it was supposed to be by end of the previous year but now those are ‘in progress’ items. They should behave like big companies and start taking up investor concalls. Stock price fought for few mins and now again lower circuit. No clarity of geographical sales, work completed, about nse listing etc. More clarity would be helpful from here on.
I would like to add interesting data point i.e PAT as a % of revenue for different companies
| FY | 21 | 22 | 23 | 24 |
|---|---|---|---|---|
| UNITED SPIRITS | 0 | 2.61 | 4.05 | 5.41 |
| UBL | 1.12 | 2.79 | 1.83 | 2.24 |
| RADICO KHAITAN | 2.52 | 1.99 | 1.73 | 1.69 |
| SULA VINEYARDS | 0.72 | 11.5 | 15.18 | 15.28 |
| ALLIED BLENDERS AND DISTILLERS | 0.04 | 0.02 | 0.02 | 0.02 |
| PICCADILY AGRO | 3.68 | 5.06 | 3.66 | 10.91* |
| *The above figure excludes impact of other exceptional income. | ||||
| secondly, this figure of 10.91% can expand to 15% in FY-25 considering the current Run rate. |
Moreover, If things go well around Chhattisgarh unit expansion, warehouse capacity increase to 2-2.5x and currently DEMAND IS Powering than SUPPLY,
the result was not on expected line of Q3 but considering the premiumization of INDRI, CAMIKARA… i think it is just the starting point…
Disclosure: invested and biased
you are right -its just the starting point .According to me their profitability bcos of Indri will skyrocket . Simple example their closing stock at cost is valued at circa 200 cr -but malt under maturation is highest in India (7.8 mio ltrs ),this should be valued according to me over 1500 cr (the more it ages the more value ) ,triangulating this info and other data point I expect Indri to have gross margin of over 70% !!
Disc-views may be biased bcos of my holding
No senior here but from what I can analyze, the next support is around 640 levels followed by 620 if you are a long-term investor all of these shouldn’t be a matter of concern but if you are riding the wave then a breach of 620 might take the stock much lower.
In these sort of markets technicals don’t work that well . In October end it went to 630 …let’s hope it bounces from there . It’s testing times for conviction . I am also regretting not selling at 1000 level but problem with selling now is that no one will tell you when to buy it back .
Disc: It still remains the largest position in portfolio .
