Emkay Global has given a buy rating to Radico Khaitan with a target price of Rs 600. The share price moved up by 0.54 per cent from its previous close of Rs 418.20. The stock’s last traded price is Rs 420.45.

Radico Khaitan Ltd., incorporated in the year 1983, is a Mid Cap company (having a market cap of Rs 5678.22 Crore) operating in Beverages – Alcoholic sector.

For the quarter ended 30-06-2020, the company reported a Consolidated sales of Rs 409.15 Crore, down 30.10 % from last quarter Sales of Rs 585.36 Crore and down 34.39 % from last year same quarter Sales of Rs 623.58 Crore Company reported net profit after tax of Rs 44.07 Crore in latest quarter.


Investment Rationale
The brokerage expects continued improvement in cash flows and ROCE (net cash position by FY22, increase in dividend payouts and ROCE to increase to 20%+ by FY23). It believes that strong earnings visibility and improved balance sheet should lead to a re-rating. At 18x FY22E, valuations are still close to a 10-year mean. It retains Buy and increase the TP to Rs600, valuing it at 25x Sep’22E (vs. 20x earlier).

Promoter/FII Holdings
Promoters held 40.3 per cent stake in the company as of June 30, 2020, while FIIs held 18 per cent, DIIs 16.6 per cent and public and others 25.1 per cent.

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