Initiating Coverage | Breweries & Distilleries
July 14, 2015
Radico Khaitan
BUY
CMP
`82
Cheaper ENA to bring merrier times
Target Price
`112
Radico Khaitan Ltd (RKL) is a leading manufacturer of Indian made foreign liquor (IMFL). It
Investment Period
12 Months
has a strong pan-India presence with growing sales in the premium brands category.
Raw material prices expected to ease: We expect the price of extra neutral alcohol (ENA), a
Stock Info
key raw material for the company, to remain stable and potentially even decline going
Sector
Breweries & Distilleries
forward. This is because sugar production during the October 2014 to May 2015 period
Market Cap (` cr)
1,093
has risen by ~16% yoy to 27.9mn tonne, which is an 8-year high production level. As a
Net Debt (` cr)
741
result ENA (a by-product of sugarcane) production too would be higher this year. Secondly,
Beta
0.8
demand for ethanol (a by-product of sugarcane) from Indian oil marketing companies for blending
52 Week High / Low
107 / 75
with petrol, is also expected to be lower as the price of petrol is around ~`34/liter (excluding taxes)
and that of ethanol is around `48-49/liter, thus making it unviable to blend ethanol with petrol.
Avg. Daily Volume
89,936
Face Value (`)
2
Pricing environment expected to be favourable for IMFL industry: Our interaction with liquor
companies suggests that the industry has now bottomed out. We expect the industry’s
BSE Sensex
27,933
pricing environment to likely get better going ahead mainly because there has not been any
Nifty
8,454
significant price hike in products in recent times due to delay in approval by various state
Reuters Code
RADC.BO
governments. Hence, the industry is now expecting significant price hike in the coming
Bloomberg Code
[email protected]
financial year. Also, the industry leader - United Spirits - has been facing pressure at the
operating level and the company has a huge debt on its balance sheet. Hence we believe that
the company’s new Management would shift focus on profitability over volume growth, which in
Shareholding Pattern (%)
turn, would lead to increased scope for other liquor companies to hike prices.
Promoters
40.5
Higher proportion of Premium products in volume mix to drive profitability: In the IMFL
MF / Banks / Indian Fls
11.1
segment, more than 20% of the company’s volumes come from prestige and above
FII / NRIs / OCBs
18.5
products, which is a high margin business, and the balance volumes come from regular
Indian Public / Others
29.9
and others brands. Since the last seven years, the company’s prestige and above brands’
volume has reported a CAGR of ~26% and their share in the product mix has increased
from 7.9% in FY2009 to 20.7% in FY2015. We expect volume contribution of prestige and
Abs. (%)
3m 1yr
3yr
above products in the IMFL segment to increase further on back of higher ad spend. The
Sensex
(4.2)
9.0
58.7
company has roped in Hrithik Roshan as its brand ambassador. Also, RKL’s presence in the
RKL
(12.3)
(20.5)
(28.9)
prestige Vodka segment is under penetrated which leaves scope for growth. Thus, this
would improve the overall margin for the company and result in higher profitability.
Valuation: On a trailing basis, RKL is trading at 1.2x EV/Sales, which is at a discount
3-Year Daily Price Chart
compared to its close peers like United Spirits (trading at 5.9x EV/Sales). Further,
180
Tilaknagar Industries is trading at 1.5x EV/Sales in spite of it having lesser presence in the
160
premium brands segment and in spite of its small size and regional focus. Considering
140
consensus numbers of FY2017, RKL is trading at a 78% discount (in terms of P/E valuation)
120
to United Spirits, which is unjustified in our view. At the current market price, RKL trades at a
100
P/E of 12.4x FY2017E EPS. We initiate coverage on the stock with a Buy rating and target
80
price of `112 (17x FY2017E EPS), indicating an upside of ~37% from the current levels.
60
Key Financials
Y/E March (` cr)
FY2014
FY2015
FY2016E
FY2017E
Net sales
1,452
1,488
1,565
1,687
Source: Company, Angel Research
% chg
15.4
2.5
5.1
7.8
Net profit
71
68
72
88
% chg
(7.8)
(5.1)
6.5
21.7
EBITDA margin (%)
13.3
11.4
11.9
12.4
EPS (`)
5.4
5.1
5.4
6.6
P/E (x)
15.3
16.1
15.1
12.4
P/BV (x)
1.4
1.3
1.2
1.1
Amarjeet S Maurya
RoE (%)
9.1
8.1
8.0
9.0
022-39357800 Ext: 6831
EV/Sales (x)
1.3
1.2
1.2
1.1
[email protected]
Source: Company, Angel Research, Note: CMP as of July 14, 2015
Please refer to important disclosures at the end of this report
1
Radico Khaitan | Initiating Coverage
Investment Arguments
Raw material prices expected to ease or remain stable
RKL’s key raw material is ENA, the price
The company’s key raw material is ENA, the price of which has increased by
of which has increased by ~23% from
~23% from `36.9 per BL in 1QFY12 to `45.5 per BL in 4QFY15. During these
`36.9 per BL in FY2012 to `45.5 per BL
financial years, prices have increased due to various reasons like lower level of
in FY2015
sugarcane production which has resulted in lower supply of molasses (by-product
of sugarcane). Further, Indian oil companies have also started procuring ethanol
for blending with petrol which has also led to an increase in the price of ENA.
Exhibit 1: Historical ENA price trend
Exhibit 2: Sugar production hits 8 year high
50
28.4
27.9
30
47.6
26.4
26.3
47
25.3
48
24.4
24.3
45.4
45.5
25
45.2
46
44.5
43.7
43.7
19.3
18.8
43.1
20
44
41.6
41.3
41.7
14.5
42
40.3
15
12.7
39.2
40
10
36.9
36.9
38
5
36
0
34
Source: Company, Angel Research
Source: Indian Sugar Mills Ass., *Period between Oct. 2014 to May 2015
Exhibit 3: Significant correction in crude oil price
Exhibit 4: Procurement in cost of petrol (excl. taxes)
48
170
50
47
45
45
150
43
42
45
130
38
40
35
110
34
34
35
31
90
29
28
30
27
27
70
25
50
30
20
Source: Capitaline, Company, Angel Research
Source: BPCL, Angel Research
Going forward, we expect prices of ENA to decline or remain stable. This would be
on account of the following reasons: -
(a) Higher sugar production: Sugar production during the October 2014 to
May 2015 period rose by ~16% yoy to 27.9mn tonne. This is an 8-year high
level of production. The government projects sugar production at around
28.3mn tonne until October this year. As a result ENA production too would
be higher this year, thus leading to decline in its prices.
(b) Lower demand for ethanol from Indian oil marketing companies: The
procurement cost of petrol (excluding taxes) has reduced from ~`48/liter in
July 2014 to ~`34/liter in July 2015 due to falling crude oil prices. Earlier, oil
companies were procuring ethanol (to blend with petrol) at `44-45/liter when
July 14, 2015
2
Radico Khaitan | Initiating Coverage
the procurement cost of petrol was around ~`48/liter. Now, the price of petrol
is around ~`34/liter and ethanol costs around `48-49/liter which makes it
unviable to blend ethanol with petrol. Thus, this would cut down demand for
ethanol and lead to a decline in its prices.
We believe higher production of sugarcane and lower demand for ethanol from
Indian oil marketing companies would lead to softness in the prices of ENA. This
would be a positive for the liquor industry which has been facing pressure on the
operating margin front due to higher ENA prices and lower price hikes.
Pricing environment expected to be favorable for IMFL industry
The Indian liquor industry is a high risk industry due to higher taxes and
innumerable regulations governing it. As a result, Indian liquor companies are
suffering from low pricing flexibility and have insufficient capacities, which is
consequently leading to their poor financial performance.
During FY2011 to FY2015 Indian liquor
During FY2011 to FY2015 Indian liquor companies witnessed pressure at the
companies witnessed pressure at the
operating level due to high competition and firm ENA prices. During the same
operating level due to high competition
period, various Indian liquor companies like United Spirits, Tilaknagar Industries,
and firm ENA prices
Globus Spirits and RKL reported EBITDA margin reduction of 1,255bp, 1,198bp,
850bp and 448bp, respectively. Also, the companies have high debt on their
balance sheets, thus resulting in higher interest costs, and in turn lower
profitabilities.
Exhibit 5: Declining margins of liquor companies
Exhibit 6: Higher debt/equity ratio
United Spirits
Tilaknagar Industries
Globus Spirits
Radico Khaitan
8
7.2
30
7
25
6
5
20
4
15
3
2
1.5
10
1.0
1
0.3
5
0
FY2010
FY2011
FY2012
FY2013
FY2014
FY2015
Globus Spirits
Radico Khaitan Tilaknagar Industries United Spirits
Source: Company, Angel Research
Source: Company, Angel Research
Our interaction with some liquor companies suggests that the industry has now
bottomed out. We now expect the industry’s pricing environment to likely get better
going ahead due to the following reasons:
(a) Since the last two years, the industry has not received any significant price hike
in its products due to delay in approval by state governments for the same.
Radico Khaitan has received price hikes in only a few states in the last eight
quarters. Hence, the industry is now expecting significant price hikes in the
coming financial year.
July 14, 2015
3
Radico Khaitan | Initiating Coverage
Exhibit 7: Price hikes announced during last eight quarters
Sr. No. State Name
During the quarter
1
Tamil Nadu
2QFY2015
2
Bihar,
1QFY2014
3
Delhi,
1QFY2014
4
Odisha and other key liquor consuming state
1QFY2014
Source: Company, Angel Research
(b) The industry leader - United Spirits - is facing pressure at the operating level
and the company has a huge debt on its balance sheet. Hence we believe that
the company’s new Management would shift focus on profitability over volume
growth, which in would lead to increased scope for other liquor companies to
hike prices.
Higher mix of Premium products to drive profitability for RKL
Since the last seven years, the
In the IMFL segment, more than 20% of the company’s volumes come from
company’s prestige and above brands’
prestige and above products like Magic Moments Vodka and Morpheus Premium
volume has reported a CAGR of ~26%
Brandy, and the balance from regular and others brands like Old Admiral
and their share in the product mix has
Brandy, Contessa Rum, 8 PM Whisky etc. The company’s prestige and above
increased from
7.9% in FY2009 to
brands command higher margins than regular and others brands. Since the last
20.7% in FY2015
seven years, the company’s prestige and above brands’ volume has reported a
CAGR of ~26% and their share in the product mix has increased from 7.9% in
FY2009 to 20.7% in FY2015.
Exhibit 8: Improving product mix in favour of Premium segment
Exhibit 9: Higher volume growth yoy in Premium segment
250
25
80
20.7
52.2
60
50.2
200
20
37
31
40
26
40
21.0
19.6
19.9
21.2
21
18.3
16.0
18.8
22.1
17.2
12.3
150
15
10.5
7.2
7.8
15
20
16.2
10
14.6
-
100
13.2
10
5.7
4.1
4.7
1.0
10.3
(20)
(6.9)
(7.2)
(6.0)
(6.8)
(26.5)
50
7.9
5
(40)
(52.0)
119
131
140
151
159
166
154
(60)
0
0
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
FY2015
Regular & Others
Prestige & Above
Prestige & Above as % of Total
Prestige & Above
Regular & Others
Source: Company, Angel Research
Source: Company, Angel Research
RKL is now more focused on selling higher margin products like Magic Moments
Vodka and Morpheus Premium Brandy. Also, we expect volume contribution of
prestige & above category products in IMFL segment to increase which would
improve the overall margin for the company and result in higher profitability.
July 14, 2015
4
Radico Khaitan | Initiating Coverage
Wide distribution network with strong brands
Currently, the company is selling its
RKL has a strong sales and distribution network with a presence in retail and off-
products through over
45,000 retail
trade outlets in the relevant segments in different parts of India. Currently, the
outlets and over
5,000 on-premise
company is selling its products through over 45,000 retail outlets and over 5,000
outlets
on-premise outlets. Apart from wholesalers, a total of around 300 employees
divided into four zones, each headed by regional profit centre head, ensure an
adequate on-the-ground sales and distribution presence across the country.
Apart from this, the company has strong brands likes Magic Moments Vodka,
Morpheus Brandy, Verve Vodka, Florence Brandy, After Dark Whisky etc.
Exhibit 10: Magic Moments Vodka - Marketing Campaign
Source: Company, Angel Research
July 14, 2015
5
Radico Khaitan | Initiating Coverage
Exhibit 11: Magic Moments Flavoured Vodka - Marketing Campaign
Source: Company, Angel Research
RKL has
33 bottling units spanning
The company has 33 bottling units spanning almost the entire country, of which 5
almost the entire country, of which 5
belong to the company and 28 are contract bottling units. RKL’s strategic bottling
belong to the company and 28 are
units are spread across the country in order to avoid the high taxes levied on
contract bottling units
inter-state movement of finished and in-process liquor.
Exhibit 12: Contract & owned bottling units across ndia
Source: Company, Angel Research
July 14, 2015
6
Radico Khaitan | Initiating Coverage
IMFL Industry Potential...
Exhibit 13: India's per capita consumption of alcoholic
Exhibit 14: Favourable demographics - % of population
beverages is among the lowest in the world
of above legal drinking age
9.5
66.8%
10
67%
9
8.5
66.4%
67%
8
66.0%
7
66%
65.6%
65.5%
6
5.0
66%
4.7
4.5
4.6
5
65%
64.8%
4
3
65%
2
0.9
64%
1
0
64%
Russia
Brazil
Thailand
USA
UK
World
India
2013
2014
2015
2016
2017
2018
Source: Company, Angel Research
Source: Company, Angel Research
Exhibit 15: Alcohol consumption - monthly per capita
Exhibit 16: Rural vs. Urban Consumption Trend
expenditure growth (%)
(mn litres)
25%
1,444
1,618
1,798
1,920
1,990
19.2%
100%
20%
17.3%
90%
14.0%
13.9%
80%
15%
13.2%
11.8%
70%
68%
68%
68%
66%
65%
60%
10%
50%
7.3%
7.5%
40%
5%
30%
20%
35%
32%
32%
32%
34%
10%
0%
0%
1987-94
1993-05
2004-10
2009-12
2009
2010
2011
2012
2013
Rural
Urban
Rural
Urban
Source: Company, Angel Research
Source: Company, Angel Research
Exhibit 17: Sales of Spirits by Category (Volume): CY2013
Exhibit 18: Sales of Spirits by Category (Value): CY2013
Rum, 15%
Rum, 12%
Brandy, 12%
Brandy, 22%
White Spirits,
4%
Whisky, 59%
Whisky, 72%
White Spirits,
4%
Source: Company, Angel Research
Source: Company, Angel Research
July 14, 2015
7
Radico Khaitan | Initiating Coverage
Outlook and Valuation
The company has not performed well in the last two years due to increasing
material costs (ENA is a key raw material) and with it not receiving significant price
hikes from various states. We expect the company to perform well going forward in
anticipation of easing material costs and on expectation of better price hikes. This
would result in an overall improvement in the operating margin of the company.
Also, with the company having reduced significant debt from its balance sheet, it
would be able to report an improvement in its profitability. We expect the company
to report a strong earnings CAGR of ~14% to ~`88over FY2015-17E.
On a trailing basis, RKL is trading at 1.2x EV/Sales, which is at a discount
compared to its close peers like United Spirits (trading at 5.9x EV/Sales). Further,
Tilaknagar Industries is trading at 1.5x EV/Sales in spite of it having lesser
presence in the premium brands segment and in spite of its small size and
regional focus. Considering consensus numbers of FY2017, RKL is trading at a
78% discount (in terms of P/E valuation) to United Spirits, which is unjustified in our
view.
At the current market price of `83, the stock trades at a PE of 15.1x and 12.4x its
FY2016E and FY2017E EPS of `5.4 and `6.6, respectively. We initiate coverage on
the stock with a Buy recommendation and target price of `112, based on 17x
FY2017E EPS, indicating an upside of ~37% from the current levels.
Exhibit 19: One year forward -PE chart
Exhibit 20: Current PE chart trading below 6 years avg.
250
40
35
200
30
150
25
20
100
15
10
50
5
0
0
Share Price
12x
18x
24x
30x
36x
PE
6 years average
Source: Company, Angel Research
Source: Company, Angel Research
Exhibit 21: Relative valuations
CMP (`) Mcap (`)
EPS (`)
PE (x)
EV/Sales (x)
P/BV (x)
ROE (%)
FY16
FY17
FY16
FY17
FY16
FY17
FY16
FY17
FY16
FY17
Radico Khaitan
82
1,093
5.4
6.6
15.1
12.4
1.2
1.1
1.2
1.1
8.0
9.0
United Spirits
3,477
50,487
38.0
60.3
91.6
57.7
5.3
4.7
13.4
12.9
26.1
30.0
Tilaknagar Inds.
32
401
2.7
5.4
11.9
5.9
1.5
1.3
0.6
0.5
5.1
8.6
Source: Bloomberg consensus, Angel Research
July 14, 2015
8
Radico Khaitan | Initiating Coverage
The downside risks to our estimates include
1) Lower than expected price hike or delay in price hike from various states
could pressure the operating margin of the company.
2) Increase in key material prices like ENA would drag the overall profitability.
3) Any regulatory issue or increase in taxes from state governments could restrict
the volume growth of the company.
4) The company’s ~8% (percentage to total shares) shares are pledged by
Promoter and Promoter Group.
5) The company is exposed to currency risk with it having foreign currency debt
of `361cr on its balance sheet as of 31-03-2014.
Company Background
Radico Khaitan Limited (RKL) is an India-based spirits company. It is engaged in
the manufacture of liquor. The company has three distilleries and one JV with total
capacity of 150 mn litres and 33 bottling units spread across the country. The
company is one of the largest providers of branded IMFL to the Canteen Stores
Department (CSD), which has significant entry barriers. RKL's brands include After
Dark Whisky, Magic Moments Vodka, Morpheus Brandy, Contessa Rum, Old
Admiral Brandy and 8 PM. Its liquor business also includes rectified spirit, country
liquor and IMFL. Its alcohol products include rectified spirit, silent spirit, cane juice
spirit, malt spirit, grain spirit and ethanol. The company’s PET division produces a
range of PET bottles and jars for industries, such as pharmaceutical, cosmetics,
home and personal care, edible oil and confectionery.
July 14, 2015
9
Radico Khaitan | Initiating Coverage
Financial outlook
Top-line likely to clock a CAGR of 6.5% over FY2015-17E
RKL has reported net revenue CAGR of ~8.8% over FY2012-15 on the back of
Going forward, we expect RKL to
volume growth in premium brands. Going forward, we expect RKL to register
register healthy top-line CAGR of 6.5%
healthy revenue CAGR of 6.5% over FY2015-17E on the back of higher growth in
over FY2015-17E
premium brands and on expected price hikes. Hence, we expect the company’s net
sales to grow by ~5% yoy and ~8% yoy in FY2016 and FY2017, respectively.
Exhibit 22: Projected Net Sales growth trend
1,800
1,687
25
20.9
1,565
1,600
1,488
1,452
20
1,400
1,258
1,144
15.4
1,200
946
15
1,000
10.0
800
13.3
7.8
10
600
5.1
400
5
2.5
200
-
0
FY2011
FY2012
FY2013
FY2014
FY2015
FY2016E FY2017E
Net Sales
yoy growth (%)
Source: Company, Angel Research
EBITDA to witness a CAGR of ~11% over FY2015-17E
Going forward, we expect the
Going forward, we expect the company’s operating margin to improve on back of
company’s EBITDA margin to be in the
anticipated lower raw material prices (ENA; due to higher production of
range of 12-12.5%
sugarcane) and expect price hikes from state governments (the company has not
received any significant price hike in most of the states in the last two years). We
expect the operating margin to stand at 11.9% in FY2016E and 12.4% in
FY2017E.
Exhibit 23: Projected EBIDTA and margin trend
250
18
15.9
14.6
16
13.7
13.3
200
14
11.9
12.4
11.4
12
150
10
8
100
209
184
193
186
170
6
151
157
4
50
2
0
0
FY2011
FY2012
FY2013
FY2014
FY2015
FY2016E FY2017E
EBITDA
Margin (%)
Source: Company, Angel Research
July 14, 2015
10
Radico Khaitan | Initiating Coverage
Company to report healthy growth
We expect ~14% CAGR in Net Profit
We expect the company to post ~14% CAGR in net profit over FY2015-17E,
over FY2015-17E
mainly led by decent net sales growth and improvement in operating margin.
Further, in FY2015 the company has reduced significant amount of debt which
would reduce the interest cost burden.
Exhibit 24: Projected Net Profit growth trend
100
9
88
90
7.7
8
77
80
72
71
7
73
68
70
64
5.2
6
4.9
60
6.1
4.5
4.6
5.6
5
50
4
40
3
30
2
20
10
1
0
0
FY2011
FY2012
FY2013
FY2014
FY2015
FY2016E FY2017E
Net Profit
Margin (%)
Source: Company, Angel Research
Return ratios expected to bounce back
We expect the company to report improvement in its ROE and ROCE on the back
of healthy profitability with strong revenue growth (on back of volume growth and
increase in average price hike). In our view, the company is likely to report a ROE
of 8.1% to 9.0% and ROCE of 7.8% to 9.3% respectively from FY2015 to
FY2017E.
Exhibit 25: Improving ROE & ROCE
11
11
10
10
9
9
8
8
7
FY2012
FY2013
FY2014
FY2015
FY2016E
FY2017E
ROE
ROCE
Source: Company, Angel Research
July 14, 2015
11
Radico Khaitan | Initiating Coverage
Profit & Loss Statement
Y/E March (` cr)
FY2012
FY2013
FY2014
FY2015
FY2016E
FY2017E
Total operating income
1,144
1,258
1,452
1,488
1,565
1,687
% chg
20.9
10.0
15.4
2.5
5.1
7.8
Total Expenditure
987
1,074
1,258
1,318
1,379
1,478
Raw Material Cost
546
585
653
717
735
789
Personnel Expenses
71
79
93
107
117
132
Selling & Administrative Exp.
205
235
286
284
321
337
Others Expenses
166
176
226
210
205
219
EBITDA
157
184
193
170
186
209
% chg
3.9
17.7
5.0
(11.9)
9.3
12.3
(% of Net Sales)
13.7
14.6
13.3
11.4
11.9
12.4
Depreciation& Amortisation
33
35
39
38
41
42
EBIT
124
149
155
132
145
167
% chg
0.1
20.4
3.9
(14.6)
10.1
15.1
(% of Net Sales)
10.8
11.8
10.7
8.9
9.3
9.9
Interest & other Charges
58
70
85
90
84
84
Other Income
21
30
36
45
45
45
(% of PBT)
24.6
27.8
34.3
51.6
42.5
34.9
Share in profit of Associates
-
-
-
-
-
-
Recurring PBT
87
109
106
87
106
129
% chg
(12.6)
25.7
(2.6)
(18.1)
21.5
21.7
Prior Period & Extra. Exp./(Inc.)
-
-
-
-
-
-
PBT (reported)
87
109
106
87
106
129
Tax
23
32
35
19
34
41
(% of PBT)
26.8
29.3
33.0
22.4
32.0
32.0
PAT (reported)
64
77
71
68
72
88
% chg
(12.6)
21.4
(7.8)
(5.1)
6.5
21.7
(% of Net Sales)
5.6
6.1
4.9
4.5
4.6
5.2
Basic EPS (`)
4.8
5.8
5.4
5.1
5.4
6.6
Fully Diluted EPS (`)
4.8
5.8
5.4
5.1
5.4
6.6
% chg
(12.7)
21.2
(7.9)
(5.1)
6.5
21.7
July 14, 2015
12
Radico Khaitan | Initiating Coverage
Balance Sheet
Y/E March (` cr)
FY2012
FY2013
FY2014
FY2015E FY2016E FY2017E
SOURCES OF FUNDS
Equity Share Capital
27
27
27
27
27
27
Reserves& Surplus
642
702
754
812
873
948
Shareholders Funds
668
728
781
839
900
974
Total Loans
650
768
904
849
840
830
Deferred Tax Liability
65
70
85
85
85
85
Total Liabilities
1,384
1,566
1,770
1,773
1,825
1,889
APPLICATION OF FUNDS
Gross Block
687
744
821
831
851
871
Less: Acc. Depreciation
185
214
250
288
329
371
Net Block
502
529
571
542
521
500
Capital Work-in-Progress
5
5
8
8
8
8
Investments
111
109
108
98
98
98
Current Assets
1,016
1,161
1,330
1,379
1,462
1,573
Inventories
179
186
211
212
223
236
Sundry Debtors
348
435
523
538
570
615
Cash
21
16
15
10
22
38
Loans & Advances
382
314
441
470
474
506
Other Assets
86
209
139
149
172
179
Current liabilities
259
249
262
270
280
305
Net Current Assets
757
912
1,067
1,109
1,182
1,268
Deferred Tax Asset
9
11
15
15
15
15
Mis. Exp. not written off
-
-
-
-
-
-
Total Assets
1,384
1,566
1,770
1,773
1,825
1,889
July 14, 2015
13
Radico Khaitan | Initiating Coverage
Cashflow Statement
Y/E March (` cr)
FY2012
FY2013
FY2014
FY2015E FY2016E FY2017E
Profit before tax
87
109
106
87
106
129
Depreciation
33
35
39
38
41
42
Change in Working Capital
(15)
(242)
(53)
(47)
(61)
(71)
Interest / Dividend (Net)
37
42
50
90
84
84
Direct taxes paid
(18)
(23)
(26)
(19)
(34)
(41)
Others
18
13
22
-
-
-
Cash Flow from Operations
142
(66)
137
149
137
142
(Inc.)/ Dec. in Fixed Assets
(118)
48
(141)
11
(20)
(20)
(Inc.)/ Dec. in Investments
(9)
(3)
(0)
(10)
-
-
Cash Flow from Investing
(128)
46
(141)
0
(20)
(20)
Issue of Equity
1
1
1
-
-
-
Inc./(Dec.) in loans
109
97
99
(55)
(9)
(10)
Dividend Paid (Incl. Tax)
(11)
(12)
(12)
(10)
(11)
(13)
Interest / Dividend (Net)
(101)
(71)
(84)
(90)
(84)
(84)
Cash Flow from Financing
(2)
15
3
(154)
(105)
(107)
Inc./(Dec.) in Cash
12
(5)
(1)
(5)
12
16
Opening Cash balances
9
21
16
15
10
22
Closing Cash balances
21
16
15
10
22
38
July 14, 2015
14
Radico Khaitan | Initiating Coverage
Key Ratios
Y/E March
FY2012
FY2013
FY2014
FY2015E FY2016E FY2017E
Valuation Ratio (x)
P/E (on FDEPS)
17.1
14.1
15.3
16.1
15.1
12.4
P/CEPS
11.3
9.7
9.9
10.3
9.7
8.4
P/BV
1.6
1.5
1.4
1.3
1.2
1.1
Dividend yield (%)
1.0
1.0
1.0
0.9
1.0
1.2
EV/Sales
1.4
1.4
1.3
1.2
1.2
1.1
EV/EBITDA
10.3
9.4
9.7
10.8
9.7
8.5
EV / Total Assets
1.0
1.0
0.9
0.9
0.9
0.8
Per Share Data (`)
EPS (Basic)
4.8
5.8
5.4
5.1
5.4
6.6
EPS (fully diluted)
4.8
5.8
5.4
5.1
5.4
6.6
Cash EPS
7.3
8.5
8.3
8.0
8.5
9.7
DPS
0.8
0.8
0.8
0.8
0.8
1.0
Book Value
50.4
54.8
58.7
63.0
67.6
73.2
Returns (%)
ROCE
9.4
10.0
9.2
7.8
8.4
9.3
Angel ROIC (Pre-tax)
10.4
10.9
9.9
8.4
9.0
10.0
ROE
9.5
10.6
9.1
8.1
8.0
9.0
Turnover ratios (x)
Asset Turnover (Gross Block)
2.3
2.4
2.5
2.7
3.0
3.4
Inventory / Sales (days)
57
54
53
52
52
51
Receivables (days)
111
126
132
132
133
133
Payables (days)
38
36
33
33
32
31
WC cycle (ex-cash) (days)
130
144
152
151
153
153
July 14, 2015
15
Radico Khaitan | Initiating Coverage
Research Team Tel: 022 - 39357800
E-mail: [email protected]
Website: www.angelbroking.com
DISCLAIMER
Angel Broking Private Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited,
Bombay Stock Exchange Limited and MCX Stock Exchange Limited. It is also registered as a Depository Participant with CDSL and
Portfolio Manager with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Private Limited is a
registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number
INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing
/dealing in securities Market. Angel or its associates including its relatives/analyst do not hold any financial interest/beneficial
ownership of more than 1% in the company covered by Analyst. Angel or its associates/analyst has not received any compensation /
managed or co-managed public offering of securities of the company covered by Analyst during the past twelve months. Angel/analyst
has not served as an officer, director or employee of company covered by Analyst and has not been engaged in market making activity
of the company covered by Analyst.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should
make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the
companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine
the merits and risks of such an investment.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
document is for general guidance only. Angel Broking Pvt. Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
Angel Broking Pvt. Limited has not independently verified all the information contained within this document. Accordingly, we cannot
testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document.
While Angel Broking Pvt. Limited endeavors to update on a reasonable basis the information discussed in this material, there may be
regulatory, compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Neither Angel Broking Pvt. Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from
or in connection with the use of this information.
Note: Please refer to the important ‘Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the
latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Pvt. Limited and its affiliates may
have investment positions in the stocks recommended in this report.
Disclosure of Interest Statement
Radico Khaitan
1. Analyst ownership of the stock
No
2. Angel and its Group companies ownership of the stock
No
3. Angel and its Group companies' Directors ownership of the stock
No
4. Broking relationship with company covered
No
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors
Ratings (Based on expected returns
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
over 12 months investment period):
Reduce (-5% to -15%)
Sell (< -15)
July 14, 2015
16