Radico Khaitan Limited is one of India’s oldest and largest manufacturers of Indian Made Foreign Liquor (IMFL). With iconic brands like 8PM Whisky, Magic Moments Vodka, Royal Ranthambore, and Rampur Indian Single Malt, the company has established a strong domestic and international presence. Radico focuses on premiumization, innovation, and sustainable growth, backed by robust manufacturing and distribution infrastructure.
In this article we are going to discuss the summary of the management commentary that was delivered on Q4FY25 performance.
Strategic Overview and Premiumization Drive
Abhishek Khaitan (Managing Director) highlighted that FY25 was a transformational year for Radico Khaitan. The company delivered:
- 28% volume growth in Q4, the highest in the last 3 years.
- Record turnover of ₹4,851 crore, EBITDA of ₹668 crore, and PAT of ₹341 crore, making it the best financial performance in the company’s history.
- A significant focus on premiumization, with plans to launch two luxury brands in Q1 FY26, developed over the last two years.
- Continued expansion in the super-premium whisky segment, reinforcing their ambition to lead in high-growth categories.
Radico emphasized maintaining premium pricing strategies, competing confidently with global brands both in India and internationally.
Impact and Opportunity from UK FTA
Radico is one of the largest importers of bulk scotch, expected to spend over ₹250 crore on imports in FY26. The UK-India Free Trade Agreement is expected to reduce import duties, providing:
- Cost savings rather than price cuts, maintaining the luxury image of its brands.
- A net positive margin impact, with no planned pricing reductions as Radico’s luxury brands (e.g., Royal Ranthambore, Jaisalmer, Rampur) already command premium positioning.
Brand and Market Development Initiatives
- Magic Moments Vodka crossed 7 million cases during FY25, with the onboarding of Kriti Sanon as brand ambassador.
- 8PM Premium Black was relaunched with bold new packaging and a stronger brand narrative.
- Marketing and brand spend increased in Q4 due to new launches and celebrity endorsements, but will remain within the 7–8% of revenue guidance.
State-Level Policy and Market Performance
Andhra Pradesh (AP):
- The new Route to Market (RTM) policy led to a market share increase from 10% to 23% through FY25.
- A major volume growth driver, reflecting the shift from local to national brands.
Uttar Pradesh (UP):
- Policy changes enabled composite outlets, increasing availability by 40%.
- Excise burden shifted to wholesalers, improving Radico’s working capital and reducing credit cycle pressure.
- Resulted in market share growth from 26% to 29% in Q4.
Telangana:
- Government has begun clearing old dues, with current supplies being paid on time.
- Radico has lowest outstanding in the industry, under ₹100 crore.
Raw Materials and Cost Management
Dilip Banthiya (CFO) commented:
- Raw material (RM) prices such as broken rice and maize have declined due to FCI ethanol redirection, resulting in cost softening.
- ENA and glass prices are currently stable, providing cost visibility for FY26.
- The make-vs-buy advantage for alcohol has stabilized at ₹7–8/litre due to backward integration via the Sitapur distillery.
Debt Management and Cash Flow Focus
Net debt stood at around ₹600 crore at the end of FY25.
The company targets a 35–40% debt reduction in FY26, aiming to be debt-free by FY27.
A sharp inventory liquidation and debtor realization helped reduce debt by ₹114 crore in Q4 alone.
Future Growth Outlook
- Expecting 15%+ volume growth in Prestige & Above (P&A) category in FY26.
- Regular segment is expected to grow 12–13% as state-specific disruptions normalize.
- Continued innovation focus, with no additional CAPEX needed in the near term due to capacity created at Sitapur unit.
Exports and Global Market Strategy
Sanjeev Banga (President – International Business) stated:
- FY25 exports surpassed the FY24 record, now contributing 5% of volume and 9% of value.
- Despite FTA with Australia, non-tariff barriers remain (e.g., maturation rules), especially for Indian whiskies.
- Radico is actively working with governments to resolve these issues and expand global reach.
Question and Answer Session Highlights
Q With the UK FTA, will companies reduce prices due to lower scotch costs? Could state governments raise taxes to compensate?
A (Amar Sinha, COO):
- We don’t expect pricing cuts; premium brands won’t dilute image for 6–8% savings.
- Companies like Radico will retain margins.
- State governments may act independently, but increasing taxes too much affects sales.
Q (Follow-up): When will the lower-cost scotch materialize?
A (Dilip Banthiya, CFO):
- Depends on government notification timing.
- No large forward inventory, so benefits will reflect soon after effective date.
Q How is Andhra Pradesh performing post RTM reforms?
A (Amar Sinha):
- Market stabilizing well.
- Share of national players rose from 40% to 60%.
- Radico’s market share increased from 10% in H1 to 23% in Q4, the highest in the industry.
Q What’s the outlook on raw materials like broken rice and maize?
A (Dilip Banthiya):
- Prices corrected due to FCI’s ethanol redirection.
- Broken rice fell to ₹25,000/ton; maize dropped by ₹2,000/ton.
- ENA and grains are stable.
Q Any updates on the Delhi market?
A (Amar Sinha):
- Current policy extended for 3 months.
- A new policy is expected in July, likely to benefit national brands.
Q With changing competition, are you confident of achieving ₹500 crore in FY26?
A (Abhishek Khaitan, MD):
- FY25 saw ₹340 crore in sales with 32% growth.
- Strong growth in Royal Ranthambore, Jaisalmer, and two new luxury launches reinforce confidence.
Q What’s your FY26 target for debt reduction?
A (Dilip Banthiya):
- Net debt to reduce by 35–40% in FY26.
- Target is to be debt-free by FY27.
Q Are ENA and glass prices expected to stay stable?
A (Dilip Banthiya):
- Yes. ENA stable; grains declined.
- Glass prices corrected twice last year and are now stable.
Q At 23% share in Andhra, is there room to grow? Any other state-level changes expected?
A (Amar Sinha):
- Yes, especially with After Dark gaining traction and new luxury launches.
- Delhi’s policy change is expected soon.
A (Abhishek Khaitan): - If Bihar’s prohibition is lifted post-election, that would be a big opportunity.
Q What’s changed in UP policy?
A (Amar Sinha):
- Composite shops expanded outlet count by 40%.
- Wholesalers now pay excise, improving Radico’s cash flow.
- Result: P&A segment grew 37%, market share rose to 29% in Q4.
Q When can we expect EBITDA margins to match earlier highs?
A (Dilip Banthiya):
- FY25 EBITDA margin improved 150 bps.
- Expect further 100 bps improvement in FY26.
- Margin enhancement driven by brand mix and cost efficiencies.
Q How do state revenues from BIO imports compare to Indian IMFL?
A (Amar Sinha):
- IMFL, especially premium and deluxe, contribute far more to taxes.
- BIO is just 5 million out of 400 million cases.
- Even with FTA, the pricing gap will not significantly erode IMFL competitiveness.
Q Will BIO become more competitive, hurting Indian brands?
A (Amar Sinha):
- Only 6–8% price benefit in current stage.
- Global brands unlikely to lower price as it affects brand perception.
- Over 10 years, Indian single malts (like Rampur) will become globally dominant.
Q What’s the current savings on in-house ENA production?
A (Dilip Banthiya):
- Make vs. buy savings currently ₹7–8/litre.
- Stabilized from earlier highs of ₹12–13.
Q When will upper prestige/super-premium products launch?
A (Amar Sinha):
- A super-premium whisky (18 mn case segment) is launching before end of H1 FY26.
- Two luxury launches in Q1.
Q Will new launches continue or pause after the upcoming three?
A (Dilip Banthiya):
- After Q1 launches, no immediate additions, but innovation pipeline continues.
A (Amar Sinha): - Focus remains on upscaling only.
Q What’s the status of Telangana dues?
A (Amar Sinha):
- Current payments are on time.
- Overdues are <₹100 crore, industry’s lowest.
- Government has started clearing old dues.
Q What’s your FY26 volume growth guidance for the Regular segment?
A (Abhishek Khaitan):
- Regular volumes expected to grow 12–13%, after normalization of disruptions.
Q Any new CAPEX needed?
A (Abhishek Khaitan):
- Sitapur unit, one of Asia’s largest, suffices for 3–4 years. No new CAPEX needed now.
Q Which Radico brands compete directly with BIO imports?
A (Amar Sinha):
- Royal Ranthambore is priced ₹100 above leading scotch brand, yet growing at 50%+.
- Radico brands hold premium positions and are well-insulated.
Q How are Telangana sales and exports performing?
A (Amar Sinha):
- Telangana payments stable; dues being cleared. Growth expected.
A (Sanjeev Banga):
- Exports grew beyond FY24’s record, now 5% of volume, 9% of value.
- Facing non-tariff barriers in Australia (maturation norms), but discussions are ongoing.
Q What is the Indian Single Malt Association doing to prevent dilution?
A (Sanjeev Banga):
- Association formed by 4 founding members to set standards.
- Working with government to define specifications and preserve authenticity.
Q Could small foreign brands enter Indian market via local partnerships?
A (Amar Sinha):
- It’s unlikely national players like Radico would tie up with niche foreign brands.
- Such brands lack strong value or brand recall to make an impact.