Radico Khaitan Share Price Target ₹5,550: ICICI Direct Says BUY as Premium Liquor Boom Fuels 22% Upside
Brokerage firm ICICI Direct has maintained its 'BUY' rating on Radico Khaitan (RKL), one of India's leading IMFL companies. Against the current market price (CMP) of ₹4,550, it has set a 12-month target of ₹5,550, implying potential upside of about 22%. The report says premiumisation is the core of the company's growth, supported by margin expansion and a rapidly shrinking debt.
Radico Khaitan at a Glance
According to the report, RKL owns 8 millionaire brands and has an annual capacity of 323 million litres, making it one of the country's largest liquor manufacturers. Its market capitalisation is about ₹60,924 crore. Over the last 52 weeks, the stock has traded between ₹2,500 and ₹4,747.
Growth Engine: Premium and Luxury Portfolio
ICICI Direct believes rising consumer preference for premium spirits and a growing cocktail culture are a major opportunity for RKL. The numbers back this up:
- Between FY23 and FY26, the Prestige & Above (P&A) portfolio grew at a 27% CAGR to ₹3,063 crore.
- Volumes rose at a 21% CAGR to 16.7 million cases over the same period.
- Magic Moments Vodka sold over 8 million cases in FY26, against 7.1 million in FY25. The report puts its market share at 60%.
- In Q1FY27, the brand posted its highest-ever quarterly volume of about 3.3 million cases, roughly 41% of its FY26 volumes in a single quarter.
- Vodka's share of the Indian spirits market rose to 6% from 4.6% in a year.
The luxury segment is also gathering pace. It generated about ₹475 crore in FY26, and the company has guided for roughly 25% growth in FY27, led by Rampur, Royal Ranthambore, Jaisalmer Gin and Sangam World Malt. RKL is present in 65+ global duty-free locations and aims to cross 100. It has also recently entered four major UK airports. Given the strong demand, management has raised its FY27 P&A volume growth guidance to 25% from 20%. The brokerage expects revenue to grow at a 16% CAGR over FY26-29.
Margins: The Road from 17% to 22%
RKL's EBITDA margin improved from 11.4% in FY23 to 17% in FY26. The drivers were a higher share of the P&A segment (45.6% versus 37.4%), operating leverage and disciplined cost control. Management is targeting a 20% margin in FY27.
The report also flags the India-UK Free Trade Agreement (FTA) as a positive. Cheaper scotch could lower input costs for IMFL manufacturers. ICICI Direct expects EBITDA margins to expand by about 500 basis points between FY26 and FY29, reaching 22%.
Debt Falls, Return Ratios Set to Improve
RKL repaid ₹138 crore of debt in Q1FY27 and expects to become net debt-free by Q2FY27. With no major capacity expansion planned, annual capex should stay at a maintenance level of ₹150-170 crore. This should improve free cash flow and leave room for higher dividends. The brokerage expects RoE to reach about 23% and RoCE about 29% by FY29.
Financial Estimates at a Glance
| Item (₹ crore) | FY26 | FY27E | FY28E | FY29E |
|---|---|---|---|---|
| Revenue | 6,050.4 | 6,975.5 | 8,132.5 | 9,361.9 |
| EBITDA | 1,021.5 | 1,365.6 | 1,710.4 | 2,053.6 |
| Adjusted PAT | 618.5 | 882.7 | 1,145.0 | 1,413.1 |
| EPS (₹) | 46.2 | 66.0 | 85.6 | 105.6 |
Between FY26 and FY29, EBITDA is projected to grow at a 26.2% CAGR and Adjusted PAT at 31.7%, both well ahead of the 15.7% revenue CAGR. In other words, profit growth is expected to come largely from margin improvement.
Target Price and Valuation
The brokerage has rolled its target forward to the FY28-29E average EPS of ₹95.6 and applied a 58x multiple to arrive at ₹5,550. Based on the report's figures, the stock trades at 69x FY27E earnings and 43.1x FY29E earnings.
Shareholding Pattern and Key Risks
Promoter holding stayed steady at 40.2% from December 2025 to September 2026. FII holding rose from 17.6% in March 2026 to 19.4% in September 2026, while DII holding eased to 27.2% from 28.1% in June.
The report lists two key risks: changes in state liquor policies, which could hit revenues, and volatility in input prices.
Bottom Line
ICICI Direct sees Radico Khaitan as well placed to benefit from India's shift towards premium spirits. However, the stock's high valuation leaves little room for error, and any slip in the projected growth could weigh on the share price.
(Source: ICICI Direct Research)
Disclaimer: This article is based on the ICICI Direct Research report (analysts: Kaustubh Pawaskar, Abhishek Shankar, Sonal Rajpal). The views and targets belong to the brokerage and are not investment advice. Please consult a financial advisor before investing.
