Radico Khaitan shares gain up to 3% as JM Financial sees 16% upside

The latest market report highlights that Radico Khaitan shares on Friday snapped their previous session's slide and settled elevated after brokerage JM Financial retained its 'Buy' rating on the stock, seeing up to 16 percent upside potential.

Shares of the firm settled at Rs 4,535.10 per share on the NSE, up 1.2 percent. Earlier in the day, it made a high of Rs 4,600 per share, up 2.63 percent.

In a note, the brokerage stated Radico Khaitan had a healthy start to FY27 and anticipated sales expansion to stay firm in the premium and above (P&A) segment, outperforming peers.

"The vodka category is seeing robust traction in India and the story here is far from over. Radico stays the dominant leader and we see enough headroom for expansion," JM Financial stated.

The brokerage estimated more than 20 percent volume CAGR for Radico Khaitan's vodka business between FY26 and FY29, despite rising competitive pressure.

It stated rising acceptance of white spirits, a wide portfolio, innovation, including flavour-based launches, and firm expansion in key markets such as Uttar Pradesh and Rajasthan would backing expansion.

Recovery in 8PM Premium Black, sustained momentum in After Dark and expansion of the luxury portfolio through distribution in hotel chains and travel retail are other key topline drivers, it stated.

The brokerage anticipates 8PM Premium Black to grow 20-25 percent following its relaunch with new packaging, while After Dark is anticipated to benefit from its packaging revamp and entry into Telangana.

On raw materials, JM Financial stated extra neutral alcohol (ENA) and packaging costs remained inflationary. That stated, it anticipates Radico Khaitan to manage the impact through a better product mix, benefits from the UK-FTA and some inventory upside.

"Overall, we do not see any challenges to its FY27 guidance (of P&A volume expansion of 25 percent and EBITDA margin of 20 percent) and earnings visibility is intact," the brokerage stated.

JM Financial rolled forward its estimates to September 2028 and boosted its target price to Rs 5,190 from Rs 4,955, while retaining its 'Buy' rating.

Radico Khaitan anticipates more than 25 percent value expansion in its luxury portfolio, fuelled by innovation and expansion of distribution. Royal Ranthambore is anticipated to be the key contributor, followed by Rampur Single Malt and Jaisalmer Gin.

The brokerage anticipates a compounded annual sales expansion of 25 percent for Radico Khaitan's premium portfolio between FY26 and FY29.

It stated inflation in extra neutral alcohol and container costs remained a concern, but anticipates the firm to navigate these challenges and achieve an EBITDA margin of 20 percent in FY27.