Motilal Oswal Bullish on This MidCap Stock: Radico Khaitan Poised for 15% Upside on Premium Growth, UK FTA

Radico Khaitan has been one of the most rewarding stocks in the Indian alcohol market. Over the past 10 years, the company's stock has grown 25 times, and in the last 5 years alone, it has jumped 8 times. Now, brokerage firm Motilal Oswal believes there is still a 15% upside left, thanks to new product launches and expanding market reach.

Radico has a strong presence in the premium alcohol space. It holds about 8% of the market in the Prestige and Above (P&A) category, with vodka making up half of its portfolio. Although it has a small share of the total vodka market (3%), experts believe there's huge room for growth. They expect strong demand and double-digit growth in this segment.

The company has expanded its distribution across India. It now reaches 1 lakh retail outlets, up from 75,000 a few years ago, and is also growing in bars and restaurants. With 15 million premium cases sold out of a 200 million-case industry, Radico is still just getting started in this high-margin space.

Financially, the company is doing well. Between FY19 and FY25, its revenues grew 15% per year, and the premium segment grew even faster at 20% per year. One concern is falling profit margins-from 17% to 14%-mainly due to rising costs of raw materials like alcohol and glass. However, Radico plans to manufacture more in-house to control these costs.

A recent Free Trade Agreement between India and the UK will also help the company. Import duties on whisky and gin will be gradually reduced, lowering the cost of ingredients used in Radico's premium products. This could save the company Rs 750 million in FY26 alone.

Still, there are risks. Rising raw material prices, tougher competition, or higher state taxes on alcohol could impact profits. But overall, Motilal Oswal sees strong growth ahead.

Should You Buy This Midcap Stock?

Motilal Oswal recommends buying Radico Khaitan's stock. The brokerage firm set a target price of Rs 7,000, which means they expect the stock to rise 15% from current levels. They have based this on future earnings and strong growth potential.

Radico Khaitan Current Share Price

NSE: RADICO: On the latest trading session on June 13, shares of Radico Khaitan Ltd closed at Rs 2,606.50. The stock rose by Rs 17.10, or 0.66%, compared to the previous close.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.