Radico Khaitan Limited Q2 FY23 Earnings Conference Call Insights

Key highlights from Radico Khaitan Limited (RADICO) Q2 FY23 Earnings Concall

Q&A Highlights:

• [00:11:28] Harit Kapoor from Investec asked about the quantum of price increase in West Bengal and the weighted average number. Abhishek Khaitan MD replied that the current price increase in West Bengal is effective on current date of 12%.So weighted avg. is about 25 bp. RADICO is expecting some more price increases in large southern states.

• [00:20:25] Abneesh Roy from Nuvama asked about the recent launches if RADICO needs to expand distribution and the pricing status in Bangalore. Abhishek Khaitan MD said the company has launched it at INR150 a can. And once the response to the product is known, RADICO said it will have to tap the depth of distribution. Once that’s studied, RADICO will go to the other big markets.

• [00:24:08] Vivek Sharma from PGIM India asked about capex that gets over in Dec., what portion of RADICO’s E&A needs would come from captive. Abhishek Khaitan MD answered that the increased capacity will be used on the UPML. In interim RADICO has to sell some exports from E&A and local users. Rest will be used by RADICO.

• [00:25:41] Vivek Sharma of PGIM India asked about the GM of the UPLM segment currently. Abhishek Khaitan MD answered that without the price increase there is a negative impact and RADICO is losing presently around 6-7% on account of that.

• [00:26:36] Vivek Sharma of PGIM India enquired about the delay in the UPML price hike. Abhishek Khaitan MD clarified that UP govt. has some processes to be followed and there is an assurance from the authorities that it will be made good, probably in a month or longer.

• [00:27:32] Mehul with JM Financial enquired about the non-IMFL segment, how much EBITDA contribution comes from it. Abhishek Khaitan MD replied that traditionally RADICO was making around 9-10% on this segment, EBITDA contribution and currently the company is making loss at the EBITDA level.

• [00:31:10] Pritesh Chheda of Lucky Investment asked about GM at the company level for UP country liquor after the price hike. Abhishek Khaitan MD answered that there is already cost push. Traditionally RADICO was making 8-10% EBITDA margin on that business and that’s the margin that’s perfect and optimum.

• [00:39:58] Kaustubh Pawaskar from Sharekhan asked about the benefit RADICO got from the rationalization of regular brand volumes in 2Q23 and if it will continue. Abhishek Khaitan MD answered that the rationalization in the regular category is a mix of where the margins are wafer thin, RADICO has cut down on its volumes.

• [00:41:51] Gaurav Lohia of Bowhead India enquired about royalty volumes, of the 1.03 million cases, how much would be P&A volume and regular volume. Abhishek Khaitan MD replied that it is 60% regular and 40% P&A.

• [00:45:02] Abhishek Jain of Arihant Capital asked if the company has taken any price hikes in UP and the quantum of it. Abhishek Khaitan MD said that in UP the company got a price increase in the IMFL segment of about close to 10% overall, which it got in 1st April. And in non-IMFL business, price increase is expected to come.