ICICI Direct Assigns Buy On Midcap Stock, In 3 Yrs Jumps 266%, Board Recommends 150% Dividend

Broking firm ICICI Direct places a Buy rating on Radico Khaitan Ltd. with a target price of Rs. 1,350 apiece. The brokerage sees a potential upside of 17% from the stock's current market price considering the given target price.

On Thursday, May 25, 2023, the Board of Directors in a meeting recommended a dividend of 150% i.e. Rs. 3/share of Rs. 2 each for the financial year ended March 31, 2023. The dividend is subject to approval of the shareholders of the company at the forthcoming Annual General Meeting.

Radico Khaitan is a Fast Moving Consumer Goods (FMCG) sector company operates in the Bavarages industry. It is a midcap firm with a market capitalisation of Rs. 15,525.54 crore.

Recommended a Dividend of 150%

The company in an exchange filing said, "Recommended a Dividend of 150% i.e. Rs. 3/- per equity shares of Rs. 2 each for the financial year ended March 31, 2023, subject to the approval of the Shareholders in their ensuing Annual General Meeting. The dividend, if approved by the shareholders at the ensuing Annual General Meeting of the Company, will be paid within 30 days from declaration at the Annual General Meeting."

Q4FY23 Results: Margins bottom out

According to the brokerage firm, Revenues remained flat at Rs. 832 crore (P&A volume grew 17%). EBITDA also remained flat at Rs. 79 crore with margins at 9.5% (30 bps YoY contraction). However, PAT fell 15% to Rs. 43 crore, due to higher depreciation expense.

Buy for a Target Price of Rs. 1,350/share

Radico remains on a strong footing even as it faces volatile input inflation (especially in glass - increased 12% from Q3FY23 and ENA). Rapid change in product mix (67% P&A revenues in IMFL) and price hike in its lower margins IMIL business, will help the company to sail over the inflationary environment in the medium term. "We remain positive on the stock and maintain our BUY recommendation. We value the stock at Rs. 1350 i.e. 48x P/E on FY25E EPS," the brokerage firm has said.

Stock Outlook

On Friday, the share price of Radico Khaitan closed 1.95% higher at Rs. 1,161.45 apiece. The stock traded its 52 week high at Rs. 1230 apiece and 52 week low at Rs. 760.60 apiece, respectively.

The stock jumped 0.48% in 1 week, and 3.43% in 1 month, respectively. It has given 47.71% positive return in 1 year. In 3 years, it gave 266.04% positive return. In 5 years, it has given 162.59% positive return.

About - Radico Khaitan Ltd.

Radico Khaitan (earlier Rampur Distillery Company) is among the largest manufacturers of Indian-made foreign liquor (IMFL) in India. The company is also a supplier of Indian-made Indian liquor (IMIL) and bulk alcohol in India. IMFL segment comprises ~80% of consolidated revenues. The rest is contributed by IMIL and bulk alcohol. P&A volumes contribute 30% to overall IMFL volumes (rest by popular).

Disclaimer - The stock has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.