The stock rallied 5.69% on January 22, 2026, closing at ₹2,996.00, as investors rewarded the company's consistent execution and margin improvement. This performance cements Radico Khaitan's position as a standout performer in the beverages sector, which has otherwise struggled with a 7.27% decline over the past year.
The December quarter results underscore Radico Khaitan's successful premiumisation strategy and operational efficiency gains. Net sales climbed to ₹1,546.75 crores from ₹1,294.24 crores in Q3 FY25, representing the company's highest-ever quarterly revenue. Sequentially, revenue grew 3.54% from ₹1,493.93 crores in Q2 FY26, demonstrating sustained momentum across the festive season.
What stands out is the quality of earnings improvement. Operating profit before depreciation, interest, tax, and other income (PBDIT excluding OI) surged to ₹267.19 crores, translating into an operating margin of 17.27%—the highest in at least the past seven quarters. This represents a substantial 306 basis points expansion from 14.21% in Q3 FY25 and a 136 basis points improvement from the previous quarter's 15.91%.
| Quarter | Revenue (₹ Cr) | QoQ Growth | YoY Growth | Net Profit (₹ Cr) | Operating Margin |
|---|---|---|---|---|---|
| Dec'25 | 1,546.75 | +3.54% | +19.51% | 154.93 | 17.27% |
| Sep'25 | 1,493.93 | -0.80% | +33.83% | 139.56 | 15.91% |
| Jun'25 | 1,506.04 | +15.49% | +32.51% | 130.52 | 15.42% |
| Mar'25 | 1,304.08 | +0.76% | — | 92.07 | 13.61% |
| Dec'24 | 1,294.24 | +15.94% | — | 95.49 | 14.21% |
| Sep'24 | 1,116.30 | -1.78% | — | 80.66 | 14.62% |
| Jun'24 | 1,136.54 | — | — | 75.38 | 12.93% |
Financial Performance: Margin Expansion Drives Bottom-Line Growth
Radico Khaitan's Q3 FY26 performance demonstrates textbook operational leverage at work. Whilst revenue grew a healthy 19.51% year-on-year, net profit accelerated at over three times that pace, climbing 62.25%. This disproportionate profit growth stems from disciplined cost management and favourable product mix shifts towards higher-margin premium offerings.
On a nine-month basis for FY26 (April-December 2025), the company has posted consolidated net sales of ₹4,546.72 crores, up 28.53% from ₹3,547.08 crores in the corresponding period of FY25. Consolidated net profit for the nine-month period reached ₹425.01 crores, representing a remarkable 69.47% increase from ₹250.53 crores in 9M FY25.
The gross profit margin expanded to 15.76% in Q3 FY26 from 12.79% in Q3 FY25, a gain of 297 basis points. Similarly, the PAT margin improved to 10.02% from 7.38%, reflecting better realisation and operating efficiency. Employee costs remained well-controlled at ₹69.70 crores, up moderately from ₹62.90 crores year-ago, indicating judicious headcount management even as the business scales.
Interest costs declined to ₹16.42 crores in Q3 FY26 from ₹19.51 crores in Q3 FY25, despite higher business volumes, indicating improved working capital management and debt optimisation. The operating profit to interest coverage ratio stood at an impressive 16.27 times for the quarter, the highest in recent periods, providing substantial financial flexibility.
Margin Momentum: The Premium Play
Radico Khaitan's operating margin trajectory tells a compelling story of strategic repositioning. From 12.93% in Jun'24 to 17.27% in Dec'25, the company has added over 430 basis points to operating margins in just six quarters. This sustained expansion reflects successful premiumisation initiatives, with higher-margin brands gaining share in the portfolio mix. The company's ability to maintain this momentum even as it scales volumes demonstrates pricing power and brand strength in the competitive IMFL market.
Operational Excellence: Capital Efficiency Reaches Multi-Year Highs
Beyond headline profit growth, Radico Khaitan's operational metrics paint a picture of improving capital efficiency and balance sheet quality. The company's Return on Capital Employed (ROCE) for H1 FY26 reached 19.28%, the highest level in recent years, up from approximately 14.64% on an average basis. This improvement demonstrates that the company is generating more profit per rupee of capital deployed, a critical indicator of competitive advantage and operational prowess.
Return on Equity (ROE) has also strengthened to 15.54% on a trailing basis, though it remains below the sector's top performers. Whilst this represents a meaningful improvement from the average ROE of 12.80%, there remains scope for further enhancement as the company continues to optimise its capital structure and improve asset turnover.
The balance sheet exhibits prudent financial management. Long-term debt stood at ₹154.29 crores as of March 2025, down significantly from ₹290.00 crores a year earlier. The debt-to-equity ratio for H1 FY26 declined to just 0.21 times, the lowest in recent periods, providing substantial headroom for growth investments or strategic acquisitions. The debt-to-EBITDA ratio of 1.04 times indicates the company could theoretically repay all debt in just over a year from operating cash flows—a comfortable position.
✓ Key Operational Strengths
ROCE at Multi-Quarter High: H1 FY26 ROCE of 19.28% represents the company's strongest capital efficiency in recent history, indicating improved asset utilisation and margin expansion.
Debt Reduction Success: Net debt-to-equity ratio of just 0.19 times provides financial flexibility whilst the operating profit to interest coverage of 16.27 times offers substantial cushion.
Working Capital Management: Despite revenue growth, the company has maintained discipline in working capital deployment, as evidenced by declining interest costs.
Fixed assets increased to ₹1,810.82 crores as of March 2025 from ₹1,700.39 crores, reflecting ongoing capacity expansion and modernisation initiatives. Current assets stood at ₹2,524.54 crores, up from ₹2,060.87 crores, supporting higher business volumes. The company's sales-to-capital-employed ratio of 1.26 times indicates moderate asset intensity, typical for the capital-intensive spirits manufacturing industry.
Market Context: Outperforming a Challenging Beverages Sector
Radico Khaitan's stellar performance stands in stark contrast to broader sector trends. The beverages sector delivered a negative 7.27% return over the past year, making Radico Khaitan's 36.18% annual return a remarkable 43.45 percentage points of outperformance. This divergence reflects company-specific execution rather than favourable sector tailwinds.
The Indian spirits market continues to evolve, with premiumisation emerging as the dominant theme. Consumers are increasingly trading up from basic offerings to premium and super-premium brands, driven by rising disposable incomes and changing consumption patterns. Radico Khaitan's portfolio, which includes established brands like Magic Moments vodka, Rampur single malt whisky, and 8PM whisky, positions it well to capitalise on this trend.
Regulatory dynamics remain a critical factor. State-level alcohol policies, taxation changes, and licensing requirements create both opportunities and challenges. Recent quarters have seen several states implement pricing reforms and rationalise duties, generally benefiting organised players like Radico Khaitan with strong compliance frameworks and distribution networks.
| Company | Market Cap (₹ Cr) | P/E Ratio (TTM) | P/BV Ratio | ROE (%) | Dividend Yield |
|---|---|---|---|---|---|
| Radico Khaitan | 38,367 | 81.58 | 12.68 | 12.80% | 0.14% |
| Varun Beverages | — | 54.40 | 8.80 | 22.82% | 0.31% |
| United Spirits | — | 54.49 | 11.41 | 19.22% | 0.91% |
| United Breweries | — | 100.29 | 8.83 | 9.86% | 0.69% |
| Allied Blenders | — | 47.46 | 7.83 | 16.49% | 0.83% |
| Tilaknagar Industries | — | 36.10 | 4.94 | 16.55% | 0.20% |
Peer Comparison: Premium Valuation Reflects Growth Expectations
Radico Khaitan trades at a P/E ratio of 81.58 times trailing twelve-month earnings, representing a significant premium to most beverage sector peers. This valuation is higher than United Spirits (54.49x), Varun Beverages (54.40x), and Allied Blenders (47.46x), though below United Breweries (100.29x). The premium reflects market confidence in Radico Khaitan's growth trajectory and margin expansion potential.
However, the company's ROE of 12.80% lags behind sector leaders. Varun Beverages posts a superior 22.82% ROE, whilst United Spirits achieves 19.22%. This gap suggests that whilst Radico Khaitan is growing profitably, there remains room to enhance capital efficiency to justify its premium valuation multiples.
The price-to-book ratio of 12.68 times is the highest amongst major peers, indicating investors are willing to pay substantially more than book value for Radico Khaitan's franchise. This multiple reflects intangible assets like brand equity, distribution networks, and market positioning that don't appear on the balance sheet but drive sustainable competitive advantage.
"Radico Khaitan's 62% profit growth in Q3 FY26 demonstrates that successful premiumisation and operational efficiency can drive outsized returns even in a challenging sector environment."
Valuation Analysis: Expensive but Supported by Growth Momentum
At ₹2,996.00 per share, Radico Khaitan commands a market capitalisation of ₹38,367 crores and trades at valuation multiples that place it firmly in "Very Expensive" territory. The P/E ratio of 81.58 times compares unfavourably to the beverages industry average of 68 times, representing a 20% premium to sector valuations.
The EV/EBITDA multiple of 46.11 times and EV/EBIT of 55.87 times are elevated by historical standards, reflecting strong growth expectations embedded in the current price. The PEG ratio of 1.31 suggests the valuation is somewhat justified by growth prospects, though any disappointment in execution could trigger multiple compression.
On a more positive note, the stock has corrected 18.92% from its 52-week high of ₹3,695.00, potentially offering a more attractive entry point than prevailing a few months ago. The current price remains 62.29% above the 52-week low of ₹1,846.10, indicating the stock has recovered substantially from its trough.
The dividend yield of just 0.14% (₹4 per share) provides minimal income, with the company retaining most earnings for reinvestment. The dividend payout ratio of 15.30% indicates management's preference for funding growth internally rather than returning cash to shareholders—a reasonable approach given the company's expansion phase.
Shareholding Pattern: Institutional Confidence Building
The shareholding structure reveals growing institutional interest, particularly from foreign investors. Foreign Institutional Investors (FIIs) increased their stake to 19.82% in December 2025 from 17.72% in December 2024, representing a significant 210 basis points increase over the year. More notably, FII holdings jumped 182 basis points sequentially from 18.00% in September 2025, suggesting renewed confidence following the strong Q2 FY26 results.
| Quarter | Promoter % | FII % | Mutual Fund % | Insurance % | Other DII % |
|---|---|---|---|---|---|
| Dec'25 | 40.20% | 19.82% | 18.79% | 3.31% | 1.93% |
| Sep'25 | 40.21% | 18.00% | 19.55% | 3.99% | 1.94% |
| Jun'25 | 40.22% | 17.77% | 19.63% | 4.45% | 1.88% |
| Mar'25 | 40.23% | 16.94% | 19.81% | 4.74% | 2.23% |
| Dec'24 | 40.24% | 17.72% | 18.75% | 4.70% | 2.12% |
Mutual fund holdings declined marginally to 18.79% from 19.55% in the previous quarter, though they remain substantially higher than the 18.75% held in December 2024. The presence of 37 mutual fund schemes holding the stock indicates broad-based institutional interest rather than concentration in a few large funds.
Promoter holding has remained remarkably stable at approximately 40.20%, with minimal quarter-on-quarter changes. Importantly, there is zero promoter pledging, indicating strong promoter confidence and eliminating concerns about forced selling in market downturns. The largest promoter entity, Sapphire Intrex Limited, holds 33.89% of the company.
Combined institutional holdings (FII + MF + Insurance + DII) stood at 43.85% as of the latest quarter, demonstrating strong professional investor participation. This high institutional ownership typically provides price stability and attracts further research coverage, though it can also amplify volatility during periods of sector-wide redemptions.
Stock Performance: Stellar Long-Term Returns Despite Recent Consolidation
Radico Khaitan has delivered exceptional wealth creation over longer timeframes, though recent months have seen consolidation. The stock has generated a remarkable 481.86% return over five years and an astounding 2,580.98% over ten years, vastly outpacing the Sensex's 68.39% and 236.83% returns over the same periods respectively.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | +3.08% | -1.29% | +4.37% |
| 1 Month | -8.34% | -3.81% | -4.53% |
| 3 Months | -9.25% | -2.51% | -6.74% |
| 6 Months | +8.62% | +0.15% | +8.47% |
| Year-to-Date | -9.11% | -3.42% | -5.69% |
| 1 Year | +36.18% | +7.73% | +28.45% |
| 3 Years | +184.59% | +35.77% | +148.82% |
| 5 Years | +481.86% | +68.39% | +413.47% |
However, near-term performance has been challenging. The stock is down 9.11% year-to-date and has declined 9.25% over the past three months, underperforming the Sensex by 674 basis points during this period. The one-month return of -8.34% reflects profit-booking after the stock's strong run-up earlier in the year.
Technical indicators present a mixed picture. The stock currently trades in "Mildly Bullish" territory after shifting from "Bullish" on January 1, 2026. It trades below all key moving averages—5-day (₹2,846.25), 20-day (₹3,081.05), 50-day (₹3,170.42), 100-day (₹3,089.99), and 200-day (₹2,853.00)—suggesting near-term weakness. However, the stock is attempting to reclaim the 200-day moving average, which could provide technical support.
The stock exhibits high beta of 1.20, indicating it's 20% more volatile than the broader market. Whilst this amplifies returns during bull phases, it also means sharper corrections during market downturns. The risk-adjusted return of 1.11 over one year compares favourably to the Sensex's 0.69, suggesting investors have been adequately compensated for the additional volatility.
Investment Thesis: Quality Growth Story with Premium Valuation
Radico Khaitan presents a compelling investment case built on four pillars: accelerating revenue growth, sustained margin expansion, improving capital efficiency, and strong market positioning in a premiumising sector. The company's Mojo score of 71/100 and "BUY" rating reflect this positive fundamental outlook, despite stretched valuations.
The "Good" quality grade reflects the company's healthy long-term growth trajectory, with sales growing at a 19.76% CAGR over five years and operating profit at 16.83%. The absence of promoter pledging and substantial institutional holdings of 43.85% provide additional comfort. The company's debt-to-EBITDA ratio of 1.04 times indicates conservative leverage, whilst the operating profit to interest coverage of 14.08 times average provides substantial financial cushion.
However, the "Very Expensive" valuation grade cannot be ignored. At 81.58 times trailing earnings and 12.68 times book value, the stock prices in significant future growth. Any stumble in execution or sector headwinds could trigger meaningful valuation compression. The PEG ratio of 1.31 suggests valuations are stretched but not entirely disconnected from growth prospects.
✓ KEY STRENGTHS
- Margin Expansion: Operating margins improved 306 bps YoY to 17.27%, demonstrating pricing power and operational efficiency
- Capital Efficiency: ROCE reached 19.28% in H1 FY26, the highest in recent quarters, indicating improving asset utilisation
- Robust Growth: 62.25% YoY profit growth in Q3 FY26 reflects strong execution and market share gains
- Balance Sheet Strength: Debt-to-equity of 0.21 times and zero promoter pledging provide financial flexibility
- Sector Outperformance: 36.18% one-year return versus -7.27% sector decline demonstrates competitive advantage
- Institutional Confidence: FII holdings increased 210 bps over the past year to 19.82%
- Long-term Track Record: 481.86% five-year return and 2,580.98% ten-year return showcase wealth creation potential
⚠ KEY CONCERNS
- Premium Valuation: P/E of 81.58x and P/BV of 12.68x leave limited room for disappointment
- Below-Average ROE: 12.80% ROE lags peers like Varun Beverages (22.82%) and United Spirits (19.22%)
- Near-term Weakness: Stock down 9.11% YTD and trading below all key moving averages
- High Volatility: Beta of 1.20 indicates 20% more volatility than market, amplifying downside risk
- Minimal Dividend: 0.14% yield provides negligible income for investors
- Regulatory Risk: State-level policy changes in alcohol taxation and licensing can impact profitability
- Valuation Compression Risk: Any growth disappointment could trigger significant multiple contraction from elevated levels
Outlook: What Lies Ahead for Radico Khaitan
The outlook for Radico Khaitan hinges on its ability to sustain margin expansion whilst continuing to grow volumes. The premiumisation trend in Indian spirits remains intact, supported by favourable demographics and rising disposable incomes. The company's portfolio of premium brands positions it well to capture this opportunity, though competition is intensifying as peers also focus on higher-margin segments.
Near-term catalysts include potential market share gains in key states, successful launches of new premium offerings, and further operating leverage as fixed costs get absorbed over a larger revenue base. The company's capacity expansion initiatives should support volume growth, whilst brand investments may drive premiumisation.
↑ POSITIVE CATALYSTS
- Sustained Margin Expansion: Operating margins holding above 17% for consecutive quarters
- Market Share Gains: Outpacing industry growth rates in key markets
- Premium Portfolio Growth: Higher-margin brands growing faster than mass-market offerings
- Capacity Utilisation: Improved asset efficiency driving ROCE higher
- Favourable State Policies: Duty rationalisations or pricing reforms in major markets
⚠ RED FLAGS TO MONITOR
- Margin Contraction: Operating margins falling below 15% would signal competitive pressure
- Volume Growth Deceleration: Revenue growth slowing to single digits
- Working Capital Deterioration: Rising debtor days or inventory levels
- Institutional Selling: Sustained decline in FII or mutual fund holdings
- Adverse Regulatory Changes: Tax increases or restrictive policies in key states
Key monitoring points include quarterly margin trends, volume growth sustainability, working capital management, and institutional shareholding patterns. Any signs of margin pressure from raw material inflation or competitive intensity would be concerning given the premium valuation. Similarly, a slowdown in volume growth could trigger valuation de-rating.
The Verdict: Quality Growth Story with Valuation Caution
Score: 71/100
For Fresh Investors: Radico Khaitan offers a compelling growth story backed by strong execution, improving margins, and favourable sector dynamics. However, the premium valuation demands a long-term perspective and tolerance for near-term volatility. Consider building positions on dips towards ₹2,700-2,800 levels rather than chasing at current prices. The stock suits investors seeking exposure to India's premiumisation theme with a 3-5 year horizon.
For Existing Holders: Continue holding with a long-term view. The Q3 FY26 results validate the investment thesis of sustainable margin expansion and capital efficiency improvement. Whilst valuations are stretched, the quality of earnings and execution consistency justify patience. Consider booking partial profits if the stock rallies 15-20% from current levels to rebalance portfolio risk, but maintain core holdings given the company's competitive positioning.
Fair Value Estimate: ₹3,200-3,400 (7-13% upside from current levels), based on 75-80x forward earnings, assuming sustained margin expansion and 18-20% revenue CAGR over the next two years. Downside risk to ₹2,500-2,600 exists if margins contract or growth disappoints.
Note— ROCE = (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results. Investments in equity markets are subject to market risks, and investors may lose part or all of their capital.
