Should You Buy Radico Khaitan After Its Strong Q1 FY27 Performance?

About This Analysis

Radico Khaitan delivered an impressive start to FY27, driven by strong demand for its premium and prestige liquor portfolio. Better product mix, faster growth in premium vodka brands and improving operating margins prompted CLSA to raise both its earnings estimates and target price. The company continues to strengthen its premiumisation strategy, which remains one of the key growth drivers for India's alcoholic beverages industry.

CLSA Upgrades Outlook

CLSA has maintained its Outperform recommendation on Radico Khaitan while raising its target price to ₹4,830. The brokerage highlighted:

• Strong growth in the Prestige & Above (P&A) portfolio.
• Operating margins exceeding expectations during Q1 FY27.
• Improving profitability due to a richer premium product mix.
• Higher confidence in long-term earnings growth.

The robust quarter reinforces Radico's strategy of focusing on premium brands rather than volume-led growth alone.

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Premium Brands Continue To Drive Growth

Radico's flagship premium brands delivered strong momentum during the quarter. Key performers included:

• Magic Moments Vodka
• After Dark Whisky
• Royal Ranthambore Whisky

Among these, the premium flavoured variants of Magic Moments Vodka recorded particularly strong growth, helping improve the company's overall profitability. This demonstrates the increasing consumer preference for premium alcoholic beverages in India.

Why Vodka Is Improving Margins

According to CLSA, one of the biggest drivers behind the margin improvement is Radico's changing product mix. The brokerage noted that:

• Vodka generates higher profitability than whisky.
• Premium flavoured vodka variants deliver even stronger margins.
• A larger contribution from these products significantly improves overall EBITDA margins.

As premium products account for a greater share of sales, the company's profitability is expected to improve further.

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Management's FY27 Guidance

Management remains optimistic about the current financial year. The company has guided for:

• Approximately 25% growth in Prestige & Above (P&A) volumes during FY27.
• An EBITDA margin target of around 20%.

Achieving these targets would further strengthen Radico's premiumisation strategy and earnings profile.

Higher Earnings Estimates

Reflecting stronger profitability and improved growth expectations, CLSA has increased its earnings forecasts. The brokerage raised its FY27–FY29 earnings per share (EPS) estimates by approximately 9%–14%, supported by:

• Higher expected operating margins.
• Stronger premium product growth.
• Improving sales mix.
• Continued expansion of Prestige & Above brands.

These revisions indicate greater confidence in the company's long-term earnings trajectory.

Investor Takeaway

Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Registered Investment Adviser, observes that Radico Khaitan continues to benefit from India's premiumisation trend in the alcoholic beverages industry. Strong growth in premium brands, higher-margin flavoured vodka products and improving operating leverage have strengthened the company's earnings outlook. Investors should monitor the sustainability of premium volume growth and margin expansion, as these will remain the key drivers of future shareholder returns.

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Written by Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.

Disclaimer: This article is intended solely for educational and informational purposes. Brokerage opinions represent the views of the respective research firms and may differ significantly. This article should not be construed as investment advice or a recommendation to buy or sell any security. Investors should conduct their own research or consult a SEBI Registered Investment Adviser before making investment decisions.