Radico Khaitan: How Its Premium Brands Like Rampur and Jaisalmer Are Driving Growth

Synopsis: Radico Khaitan is expected to benefit from premiumisation and strong demand trends, with around 25% EPS CAGR outlook supporting growth visibility and valuation comfort

The article outlines whether this alcohol company can sustain its next growth phase, driven by premiumisation, strong industry demand, market share gains, and improving margins, alongside a positive earnings outlook and continued valuation support from brokerages.

With a market capitalization of Rs 42,706 crore, Radico Khaitan Ltd’s share is closed at Rs 3,189.50 per share, down 0.28 percent from its previous day’s close. The share of this company has given 518 percent over the last five years.

Rationale behind the next growth phase

Radico Khaitan is expected to deliver around 25 percent EPS CAGR over FY26–FY28E, which supports current rich valuations. Based on this outlook, the stock is valued at 55x FY28E earnings, leading to a target price of Rs 3,850 and a maintained BUY rating by MOSL.

Premium shift boosting earnings profile: The company has seen strong growth in prestige and above (P and A) volumes, rising from about 4 million cases in FY15 to nearly 17 million in FY26E. This segment now contributes around 70 percent of IMFL revenues, up from 48 percent in FY19, supporting margins.

Market share gains driven by faster growth: Radico Khaitan has grown much faster than the industry, reaching around 31 million cases against an industry size of about 400 million in FY25, implying nearly 8 percent market share. This consistent outperformance has helped the company steadily gain position in the market.

Favourable industry tailwinds: The Indian liquor industry is seeing steady demand growth supported by favorable demographics, rising incomes, and greater social acceptance. This is reflected in strong operating trends, with IMFL and P and A volumes growing around 30 percent in 9MFY26, well above historical levels, aided further by supportive recent liquor policies.

Strong premium portfolio driving growth: Radico Khaitan has benefited from strong premiumisation, with its P and A portfolio delivering 13 percent volume CAGR between FY19 and FY25 and 20 percent revenue CAGR. Super premium and Scotch brands like Rampur, Jaisalmer, and Royal Ranthambore are driving higher realizations and scaling toward Rs 5 billion in FY26.

Cost structure supports earnings stability: The liquor industry has limited exposure to crude volatility as ENA and glass form major input costs but are largely domestic or indirectly linked. Radico Khaitan’s Sitapur distillery ensures steady ENA supply, while recycled glass usage has risen to 19.8 percent in FY25, improving cost efficiency and supporting earnings resilience.

Margin recovery outlook supported by mix and efficiency gains: Radico Khaitan faced margin pressure in FY22–FY24 as EBITDA margin fell from 17 percent to 12 percent due to higher ENA and glass costs. Going ahead, margins are expected to improve gradually, supported by premiumisation, stable input costs, operating leverage, and efficiency gains from packaging and trade benefits.

About the Company

Incorporated in the year 1943, Radico Khaitan is one of the most recognised IMFL (Indian Made Foreign Liquor) brands in India. The company was initially known as Rampur Distillery Company and was focused on distillation and bottling for branded players and canteen stores of the armed forces.

Financial Highlights: Revenue from operations rose by 19.5 percent to Rs. 1,546.7 cr in Q3FY26 from Rs. 1,294.2 cr in Q3FY25. Gross margin improved from 43 percent to 46.5 percent. EBITDA significantly increased by 45 percent from Rs. 183.2 to Rs. 265.4 cr. EBITDA margin improved to 17.2 percent from 14.2 percent. Net profit increased by 62 percent from Rs. 96 cr to Rs. 155 cr over the same period. Net income margin improved to 10 percent from 7.4 percent.

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