Ladies and gentlemen, good day, and welcome to the Radico Khaitan Limited Q4 FY 2026 Earnings Conference Call hosted by DAM Capital Advisors. As a reminder, all participant lines will be in a listen-only mode, and there will be an opportunity for you to ask question after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Mehra. Thank you, and over to you, sir.
Thank you. Good evening, everyone. We would like to thank Radico Khaitan's management for providing DAM Capital with the opportunity to host Q4 FY 2026 earnings call. Today, we have with us Mr. Abhishek Khaitan, Managing Director, Mr. Dilip Banthiya, CFO, Mr. Sanjeev Banga, President, International Business, and Mr. Sudhir Upadhyay, Chief Sales Officer. Now, I would like to hand over the call to Mr. Abhishek Khaitan for his opening remarks. Thank you, and over to you, sir.
Good afternoon, ladies and gentlemen, and thank you for joining us on Radico Khaitan's Q4 FY 2026 Earnings Conference Call. FY 2026 has been an important year for Radico Khaitan and in many ways an inflection point in our journey. The business delivered a strong performance supported by disciplined execution, a richer portfolio mix, and a continued focus on value-led growth. During the year, we crossed two key milestones with net revenue exceeding INR 6,000 crores and EBITDA crossing INR 1,000 crores. These achievements reflect the sustainability of our business model, the strength of our brands, the investments we have made over the years, and the growing scale of our premium and luxury portfolio. Our Prestige & Above segment continued to lead growth while our luxury portfolio delivered sales value of INR 475 crores in line with our guidance.
We expect to sustain this growth momentum and deliver 25% growth in FY 2027 in this portfolio. Our recently launched luxury brand, Rampur 1943 Virasat Indian Single Malt and Spirit of Kashmyr Luxury Vodka are gaining strong traction with consumers and the trade. In February this year, globally renowned whisky expert and author of The Whisky Bible, Jim Murray, was in India for an exclusive tasting event of Virasat. He also visited Rampur for the opening of our latest still house. His earlier visit to Rampur was nearly three decades ago when our first malt plant was just a couple of years old. Our current single malt portfolio not only showcases the craftsmanship behind various expressions, but also reflects the growing international interest in Indian single malts.
Alongside this, our broader premium portfolio continues to scale steadily across key markets, supported by sharper execution and increasing consumer pull. Royal Ranthambore Whiskey delivered an outstanding performance, growing over 50% during the year, driven by strong demand across both civil and CSD channels. Magic Moments Vodka continued its strong trajectory with 21% volume growth during the year to reach 8.6 million cases and around INR 1,500 crores in sales value, further strengthening its leadership in the vodka category. During Q4, Magic Moments registered 28% year-over-year growth. New flavor innovations, including Flavours of India category, are contributing to this robust momentum. Going forward, we'll continue to add more flavors as we lead disruptive growth in the category. After Dark Whiskey continued to deliver strong performance, recording over 60% growth and crossing 3.1 million cases during the year.
We also continue to deepen consumer engagement through focused marketing, on-trade activations, and brand advocacy initiatives. The Royal Ranthambore limited edition pack celebrating India's six legendary tigers brought together premium storytelling with a strong message around wildlife conservation. Our experiential campaigns and focused digital engagement further helped us connect with younger consumers in a more authentic manner. As we have discussed earlier, the on-trade channel continues to be a strategic priority for us. Over the last two years, we have made significant progress in building a stronger foundation, and the results have been in the line with our expectations. In FY 2027, we will further scale our on-trade agenda across advocacy, distribution expansion, key account partnership, and airports. These initiatives will enhance visibility, trials, consumer experience, and premium brand activations, strengthening the reach and salience of our luxury and premium portfolio.
From a financial performance perspective, the year has been encouraging. A better portfolio mix, relatively benign input costs, and the benefit of scale have helped us to improve margins and returns. We will, however, continue to monitor the global environment closely, especially developments in West Asia, given the possible implications for supply chains and input costs. Looking ahead, the consumer environment remains supportive, and we remain confident about Radico Khaitan's long-term growth opportunity. Our focus will remain on building our Prestige & Above portfolio, investing behind the innovation and brand equity. During FY 2027, we expect to grow our Prestige & Above portfolio volume by 20% and expect our EBITDA margin to expand by 125 basis points for the full year. With that, I would now like to hand over the call to our CFO, Dilip Banthiya, for a detailed review of our financial and operational performance.
Thank you. Over to you, Dilip.
Thank you, Abhishek. Thank you everyone for joining us on this call today. FY 2026 was milestone year for Radico Khaitan, with robust operating performance translating into higher profitability, improved return ratio, and enhanced cash flow, free cash flow generation. The result demonstrates the power of our premiumization strategy, growing scale advantage, input cost stability, and disciplined financial management. During Q4 of FY 2026, we delivered a strong all-round performance with total IMFL volume of 9.52 million cases, reflecting a 4% increase year-on-year basis. Prestige & Above category continued strong upward trajectory, recording 28% volume growth. The performance was supported by strong brand momentum and premiumization-led product mix.
Regular volume degrowth was due to a higher base in quarter four of FY 2025 after the change in the route to the market in the state of Andhra Pradesh and the impact of policy changes in Maharashtra and Karnataka. On the profitability front, gross margin during the quarter was 48%, representing an expansion of 450 basis points on year-on-year basis and 150 basis points sequentially. The improvement was led by better product mix, softer raw material prices, and ongoing premiumization. We continue to monitor evolving situation in West Asia and confident of our margin expansion trajectory over the mid to long term. EBITDA margin during the quarter stood at 19%, expanding 565 basis points year-on-year, highest ever EBITDA margin, reflecting the strength of our premiumization strategies, operating leverage and continued cost discipline.
This margin performance is an important outcome of investment we have made over the years in building our premium and luxury portfolio. The improvement in profitability has also translated into stronger return ratios. Higher operating profit and better asset utilization have contributed to improved return on equity and return on capital employed. As the Prestige & Above luxury portfolio continue to scale, we expect further improvement in the overall capital efficiency of the business. Turning to the balance sheet, net debt reduced by INR 329 crores during the year, driven by improved profitability and cash flow generation. Our balance sheet remains strong, and we are well on track to become debt-free in FY 2027. Capital allocation continues to be prudent and selective, with ongoing CapEx largely directed toward maintenance, efficiency improvement, and essential capacity optimization.
In line with our commitment to the shareholder value, the Board has articulated a strong dividend policy with a minimum payout of 20% of profit after tax. This reflects our confidence in the cash flow generation of the business and maintaining adequate flexibility to invest behind future growth opportunities. Looking ahead, while we remain mindful of our external volatility, the cost environment, operating leverage benefits, and financial discipline to provide comfort on margin sustainability and cash flow generation. Our focus will remain on driving profitable growth, strengthening the balance sheet, improving return ratio, and enhancing shareholder value. With that, we now open the line for question answer.
Thank you. We will now begin the question- and- answer session. Anyone who wishes to ask question may press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Aditya Soman from CLSA. Please go ahead.
Hi. Good evening, and thanks for the opportunity. Two questions. Firstly, can you throw some light on new product launch plans for FY 2027, particularly in the Prestige & Above and luxury space? Second, your 125 basis point EBITDA margin expansion is fairly robust given the commodity environment. One, how do you plan to mitigate the higher commodity cost? Is this margin expansion over full FY 2026 or full Q 2026? That's it.
To answer your first question about the new launches, if you see in the last year itself, we've launched three, four brands in the luxury as well as the PNA category. We want to consolidate that. That will be our first objective, and take it nationally. Like our Virasat Indian Single Malt, The Spirit of Kashmyr, right now it is in 10 states. We want to take it to 20 states. That will be our prime focus. Plus we've launched new flavors of Magic like Jamun, Mango, Thandai, which we are going to again take it nationally. In the coming year, what we feel we are going to launch is new, some more flavors in the Magic family, and those will be also in the Flavors of India category.
At the end of the year, we'll be coming out with the tequila in D'YAVOL Spirits. These are our launch plans. As far as the margin goes on the margin front, Aditya, actually, as you have noticed that in last quarter, we have improved our gross margin by 450 basis points and EBITDA margin by 565 basis point, and we are quite confident to add 120 basis point to 125 basis point margin in the coming year 2027. This is an annualized on annualized basis.
We have got the price increases in some of the states which amount to be around 60 basis points. At the same time, product premiumization will yield us more than 200 basis points. We'll be more than mitigating the impact of the cost push. Thereafter also we are confident to deliver 120 - 125 basis point margin expansion.
That is very clear. Thanks very much. Just one follow-up on the margin. Will there also be some unlock given that you had a large number of new launches last year, and so I am assuming there was a huge marketing spend behind that. Could there be some unlock in marketing spend as well, given that the number of new launches is lower?
We have been actually consistent in our policy on spend in the marketing. As we have always been guided that, with 6%-8% is the bracket where we spend the marketing expenses depending on the new launch and our existing flagship brand. We will balance out in that. As our top line has grown by 25% this year also, the increase in top line will further increase the quantum of the marketing expense. We will be within that.
Perfect. That's very clear. Thanks so much.
Thank you. The next question is from the line of Vishal Gutka from ASK Investment Managers. Please go ahead.
Ideally congrats on excellent set of numbers. Three questions from my side. First one on Karnataka State. Now with the newer new policy announced by the state, the pricing differences between regular and premium has come down, so how do you plan to capture that given that the gap has come down a bit, driving the premiumization and upgradation agenda that you have? Second question is around West Bengal.
Now, there is a change in government that has happened. Do you think there could be a meaningful change in the way the market operates? If you can provide a framework as of now how the market is operating as on date. Sir, the third question is on Bihar State. Are we hearing murmurs that prohibition could be uplifted? If you can provide any update that you are aware about. Thank you.
Hi, this is Sudhir Upadhyay. First of all, regarding Karnataka, which you had asked. Yes, we had seen last time when Karnataka has rationalized the pricing for the premium brands, there was a significant increase which has come on the premium brands. Since we have the portfolio of the premium brands, which is like Rampur, Jaisalmer, Royal Ranthambore, et cetera, it is very well established there. We had also gained the advantage on account of this price rationalization, which has been done almost a year and a half back. This time also, we are anticipating the government is working on the similar lines. Although the official announcement is not there, in the case if it is going there, we will certainly be benefited with that. Your second point is regarding the West Bengal.
West Bengal, it's too early to preempt anything because there is a change which is recently done. We will wait and watch on what is happening on the West Bengal. On basis of that, we will put the strategy there. We had a strong vodka base there, so we will get the benefit of that.
Sir, is it a open market or is it regulated state as of now? West Bengal.
No, it's a open market. Yes, it's a open market right now, so they have a private retailers, et cetera, there. If there are any changes which is going to happen, then we will see accordingly.
Got it.
Third one was regarding the Bihar. Bihar, yes, we will wait and watch. Before the prohibition, we used to have a large consumer base in Bihar, and it is a significantly populated state. We will wait and watch in the case if anything happens with Bihar, we will get the benefit of it.
Got it. Got it, sir. Wishing you all the best for future quarters. Thank you.
Thank you. The next question is from the line of Harit Kapoor from Investec. Please go ahead.
Hi, good evening. I just had three questions. One was on the initial comments, Abhishek ji, on the unlock because of the distribution expansion on the luxury portfolio. My understanding was that a lot of this work you had already done. Just wanted to get your sense on how much more can this benefit, whether in terms of more outlets that you can still reach on the on-trade or maybe more product in those same outlets. What's the potential still of that? The second question was on exports. I'm sure you would have taken some impact in the last six months because of tariffs, et cetera.
I just wanted to kind of get your thought on how fast that segment can grow, you know, going forward and how much impact it would have had in '26. The third question was on the margin bit. T he 100 - 125 basis points. Does it also take into account the fact that, are you already including the fact that there will be an India-U.K. FTA benefit for you possibly in the second half of this fiscal year? Those are my three questions. Thank you.
To answer your first question regarding the expansion to the various states and on-trade, I think, we see that especially with Virasat, Kashmyr, all this, there's a huge scope of expanding it. On-trade also, what we had told about two years back with our luxury portfolio has become a key focus area for Radico. We are adding outlets by the day, and this year brand advocacy is one of our most important initiatives. We are planning to have about close to 1,000 advocacy sessions in the on-trade. I think all this put together, that is why we are confident that our luxury portfolio should grow by 25% in terms of value from INR 475 crores. As far as export goes, I think Sanjeev will answer that.
Harit, in terms of the U.S. tariffs, at 10% it's not make or break, especially for the luxury portfolio, where the difference on the retail end would be about $5-$6 a bottle and all. That's not substantial. The U.S. market as it is, as you would have seen from all the other players as well, whether in the alcohol space or anything else, is on a slightly softer note. We are all hopeful it will bounce back pretty soon and should not have any major impact on our luxury portfolio.
Regarding the margin expansion, as you said that, U.K. - India by FTA benefits. 125 basis point expansion is inclusive of all. At the same time, there can be some pluses and some minuses. We are conservative on our listing that something goes on cost push side and all that. 125 basis points should be delivered, given the current scenario.
Great. That's it from me. I'll come back for more. Thank you very much.
Thank you. The next question is from the line of Abhijeet Kundu from Antique Stock Broking. Please go ahead.
Yeah, thanks for the opportunity and congratulations on a great set of numbers. Just a follow-up on the, you know, the previous question that to just clarify, if, I mean, excluding U.K. FTA and given the current environment, Radico is looking at 100 - 125 basis points improvement in margins. Is that right, [Sanjeev]?
Abhijeet, actually, as we said, with the current scenario, I can't predict if it goes much uglier than what it is today with the if LPG and other thing goes out of stock and the some of the units of glass bottle and things are disrupt with the production and all that. Otherwise, we're pretty confident because we see this should not happen and the geopolitical situation also should be taken care of next 15, 30 days and all that. We have a long-standing relationship with our supply chain, we're pretty confident about continuity of the business. Given these circumstances and all, we confident to deliver that until and unless there is something very drastically negative.
Sir, what I understand is the Sitapur and Rampur Distillery, 50% of it is biomass dependent and less dependent on LPG. On an overall basis, assuming things are getting better, but assuming that there are issues with LPG and LPG supplies, that is one question. Second, what happens in that scenario? Second question is that glass prices, are you seeing any inflation right now? After your negotiations, what is the and what is your dependence on glass? Because a major part of it would be glass.
There is, you know, lot of this company, lot of alcoholic spirit companies have switched to hip flasks and hence are dependents on PET bottles. What could be the overall impact of the current scenario and if it increases from the current level? Just a slightly a view on that.
Abhijeet, actually your first point regarding the my power and fuel balancing and all that. It is largely 90% of our power and fuel between, in both the plants, Sitapur and Rampur, is biofuel-driven. I'm not at all dependent on the LPG. It takes care of about itself and the biofuel is locally available, and there are boilers, et cetera, and turbines which generates the power. In both the plants we are self-sufficient on our captive basis. Your second question regarding the glass. As I said earlier also that we have a longstanding relationship with the glass manufacturer. We don't foresee any impact on our glass supply. At the same time, there has been some inflation in the glass prices in the last month. Around 15% of the glass price have got increased.
We have factored into our costs, this thing, costing that. After that also we're talking about, the margin expansion. On your third point, as the trend is going around, and Abhishek can speak much more on that. On the extra pocket pack, it is a trendier pack and it is gaining momentum. That is also reducing dependency on glass. That is another feature which is coming in the demand point of view and consumer preference point of view.
Right. We are promoting that also.
Understood, sir. On a top-line front, you know, when I look at your, I mean, growth and the sustainability of that, if we have to look at a 15%-16% at least, revenue growth for the next 2 years, and you know, about a 11%-12% volume growth, then a significant part of that would come from Magic Moments vodka, After Dark, 8PM Black. I don't know how that is moving on. There is a part of it which Old Admiral, where you were where you got benefited in Andhra. If you have to, you know, look for this next two years, how would the scenario be in terms of your brand growth?
I don't want any figures, which would be the brand that would drive the larger growth? One is your, you know, INR 475 crores of luxury portfolio, which will grow at about 20%-25%. That we understand very well, and that is doing very well. What about the other portfolio? In addition to that, sorry. How have you seen the MML panning out? Has it settled down? Because that has impacted a part of Radico's volumes as well. How do you see that panning out going ahead? Yeah, that's fine.
If you see last year our growth of PNA has been 28%. Vodka definitely what we are seeing is a shift towards the white spirits. Like if you see total market share of the white spirit in India is about 4.5%, whereas globally it is 28%-29%. We have a still a long way to get that conversion. I think what we are seeing with the innovations of the flavor, et cetera, a lot of consumers are now shifting to the white spirit. I think in the times to come or in the current year, which we are already seeing, Magic Moments will be a big driver of our growth, number one. Number two, After Dark also has grown very well.
It has grown by 62%, and we feel that it is gaining traction, so growth will come from there also. We have done a repackaging or a retransformation of 8PM Premium Black in the second half of last year, and this quarter we grew by about close to 60%. I think growth is coming from all these three angles. We are very confident that our PNA category volume growth for the next year will be 20%.
Understood. Thanks. That's it from my side. Thank you.
Thank you. The next question is from the line of Mehul Desai from JM Financial. Please go ahead.
Hi sir. Congrats on a great set of numbers. Firstly, just wanted to, while you did allude to vodka segment and P&A segment being seeing a strong growth, how should one look at the realization growths here? Because obviously, the luxury portfolio is also growing pretty fast. Do you see this realization growth of, you know, low single digits that we saw in FY 2026 for P&A? Can that be that Can that also increase? Secondly, how do you look at the regular segment growth on a steady state basis?
On the realization front, as our PNA and especially luxury is growing faster than the even PNA. We expect that realization at volume and value delta will be in the range of 300 - 400 basis point as an aggregate basis. As far as your second question. Regular. Re-regular.
R egular segment, regular segment in my opening remark I said is because of some policy and high base, this time it has regrown in Q4. However, in the full year we've grown by 30% on the regular side also. This year we expect in the range of 3%-5% growth in regular category.
Okay. That's a volume growth you're saying, right? 3%-5%.
V olume. Yes.
Understood. Got it. Yeah. Thank you. That's all from my side.
Thank you. The next question is from the line of Rahul Agarwal from Ikigai Asset . Please go ahead.
H i, sir. Good evening. This is Rahul Agarwal from Ikigai Asset . Sir, the question related to, you know, earlier questions asked on growth. 20% PNA volume growth implies about 3.5 million cases roughly additional. Similar question about the earlier analyst ask on, you know, which category and brands will contribute. You mentioned Magic Moments, After Dark, 8 PM Black repackaging. Are these three, you know, category or brand gonna be similar to contribute this 3.5 million cases? Is there enough market for that? That's first question. Secondly, in terms of, you know, capacity, related question to the growth outlook. To support this 20% growth, you know, you said your CapEx is largely maintenance and optimization.
How are we placed in terms of in-house capacity across, you know, material, packaging, bottling, printing, stuff like that? You just highlight, do we have enough to support this? You know, give more color on this 20% growth, please. That's the first question.
The first question is regarding the 20% category. At 20% growth on the PNA side, yes, you are right that these are the brands which will take it. Like, Magic family is growing more than 22% in as a whole, and last quarter, 28%. New flavors are adding a lot of strength to the Magic growth. After Dark, which is a large in large segment, it is an industry of 75 million+ cases , that is also adding. Royal Ranthambore, the another brand which is also growing by more than 50%. As a bouquet, as some of the brands are still in a very nascent stage and all that, we are confident to deliver 20% growth or on as a category, full categories, as a PNA category.
Second question is regardi%ng the capacity. Actually around 60%-65% of our capacity is outsourced by lease arrangements, et cetera, across India, and 30%-35% is being handled by us in our own plants. We believe in outsourcing that with the quality tie-up arrangements, et cetera. We are confident, and the CapEx, as I said, will be in the range of INR 160-INR 175 crores, which will be largely on my internal capacity expansion and optimization, et cetera. We will be doing that mix of that. There's the capacity is not a constraint for the growth.
Got it, sir. This entire 60%-65% outsourced arrangements, you know, from a supply chain perspective, you know, they could face some hiccups in terms of whatever they are sourcing components and material from. Of course, cash is an issue and it could have some supply hiccups. I n terms of our discussions with them, this outlook in terms of 20% growth also accounts for all the supplies on time to the vendors as well, right?
As far as the tie-up unit goes, all the material is procured by Radico. We are only converting it. All the raw material is our this thing. We don't foresee any problem in that.
Got it, Dilip . Just lastly, on employee cost, just as a direction, when I look at, you know, over the last four, five years, this number actually has grown, you know, much lower than what top line growth Radico has seen overall from a system level. Of course, we've been investing into, you know, people and we've been training people inside the company itself. Going forward, do you still think this 15% cost CAGR for staff cost is, you know, is enough to sustain this 20%-25% kinda PNA outlook over the next two, three years?
Yeah. Our internal team is very strong. Second is the operating leverage is coming into play as the turnover is increasing, you do not require the same number of manpower. The operating leverage is kicking in, which is helping our margins also.
It should continue the similar way as what we have seen so far over the last four to five years, right?
Yes.
Okay. Perfect. Thank you so much, and best wishes for the next year.
Thank you. The next question is from the line of Navani Naredi from Naredi Investment Private Limited . Please go ahead.
Hello. Am I audible?
Yes, ma'am.
Congratulations and thanks for the opportunity. My first question is giving rising health awareness, how are you adopting your portfolio like premium ready to drink low alcohol to capture Gen Z consumers and also diversifying the portfolio which will reduce the dependence on Indian excise policy? That is my first question. Hello?
As far as the Gen Z goes the white spirits is what the Gen Zs prefer, and that is where our innovation of the different flavors of vodka is coming into play. That is helping us to get the Gen Z into the wide spreads, what I told earlier, we see this wide spreads expanding in lot of states now. I think that is the trend we are seeing with the Gen Z. As far as low alcoholic or RTD goes, as of now, we don't have any major plans to get into it.
Because these days, what I observe personally is, Gen Z's focus is on like they are very careful about what they're drinking, and they're limiting their, they don't drink too much also. They think and then they act. That was my concern how are we thinking to modify our portfolio into non-alcoholic or low alcoholic beverages so that we can benefit in future. That was my concern.
You are absolutely right. The Gen Z, what they are doing is everyone is like, health conscious, responsible drinking, et cetera. They drink less, but they want to drink the finest. That is why y ou see the P&A category is growing across India, and that is the main trend.
Okay. Like, no future plans of getting into another like low alcoholic drink. Many of your competitors are also entering into those segments. You don't have any plan to enter those segments, right? In future. Hello?
No, we don't. Yeah, we don't have any plans as of now.
Okay. Another question is like, Rampur Indian Single Malt and Jaisalmer Craft Gin and Magic Moments, like these are getting a lot of traction, in global market, like internationally also. Like knowing that, our share, like international contribution, to top line is around 8%-9% only. Going forward, are we looking to penetrate even in a better way, the global market scenario? How are we strategizing that forward?
The international market is a very important strategic market for us. It's not only the international market, but even the global travel retail. That's very important. We are currently in 50+ airports, and our target is to cross 100 airports in quick time. In terms of the share of international business in the overall, it's thanks to our domestic business which is growing at a very, very fast pace. The share keeps coming down, so we're not complaining about it.
All right. All right. That was my question, thank you, I really like this. T his is the first time I'm attending the investor call, you're really doing a great job, all the best for the future. Thank you.
Thank you. The next question is from the line of Yash Patil from Dalal & Broacha. Please go ahead.
Hi, sir. Thank you for the opportunity. You in Q3, you flagged the Maharashtra industry volume down by around 20% post MML policy and said you would launch MML through your D'Yavol joint venture in January. How has this D'Yavol joint venture performed since launch, and what is your current market share in Maharashtra, and do you see the market recovering towards the original 2.4 million cases per month in Maharashtra?
You see, as far as Maharashtra is considered, Maharashtra we have, you know, resiliency of around 3%-4% of our overall business. Yes, after the MML introduction, the industry, IMFL industry has gone down. I t has gone down by 20%-25%. Gradually MML is stabilizing, and we hope so that IMFL in the over a period of time should come back to the, you know, in the normal position. Since we are cutting vodka category and above there, so premium and above is stable for us.
Y es, sir. Thank you, and all the best for you too.
Thank you. The next question is from the line of Vinay Rawal from Choice Institutional Equities. Please go ahead.
Thanks for the opportunity, sir. I had couple of questions, but they are more or less answered. Thank you so much.
Thank you. The next question is from the line of Dhiraj Mistry from Jefferies. Please go ahead.
Yeah. Hi. Good afternoon, sir. sir, can you spend some time on Karnataka policy? How do we read that, what kind of price decline or hike we can expect across range of products?
See, as we have said earlier, Karnataka is on the progressive march. As far as excise is considered, they have taken this step last year also where they have rationalized the price of premium brands. Our brands like Rampur, Single Malt, Jaisalmer Indian Craft Gin, Royal Ranthambore, Sangam, et cetera, have been benefited in the larger way, and other brands of the industry have also been benefited. It's a Cosmo market at the end of the day, it has lot of consumption. Now in the second step also, government also thinking on the similar lines. At the same time, you know, since the policy is yet not out, we cannot say that.
As far as market and other things are considered, we can say that they are thinking on that line, and they have seen a success of Prestige & Above category increase. The overall saliency of the Prestige & Above category has been increased in the last decision of that. Definitely they will look forward to rationalizing the brands further.
Got it. Got it. Sir, what would be the margin for non-IMFL business in this, for the full financial year? How do we see the growth as well as margin profile of non-IMFL business going ahead?
The margin in the IMFL business is around 20% +, 20%-21% for full year. Non-IMFL, it is in the range of 9%.
How do we expect growth in non-IMFL business?
Non-IMFL business is growing at 7%-8%, this thing which is a natural growth of the industry. As far as the bulk spirit is concerned, that will in due course of time start being consumed by us captively, so that will get reduced. Proportion as of now also, the IMFL is constituting around 70%-75% of the overall saliency of the top line. We'll see a gradual shift to IMFL from non-IMFL.
Okay. Okay. Sir, last question is on CapEx, that now that we will become debt-free, in FY 2027, and already you have announced that minimum 20%, would be the dividend payout policy. How do we see the incremental, capital allocation going ahead? Would we do further CapEx or, would be looking for, inorganic growth or acquisition? How do we see on capital allocation?
As far as the first step we have taken on this is to have a minimum payout of 20%. In due course of time, with the time passes and the availability of cash generation and free cash flow available, it will be looked into. If there is an opportunity which gives us more than 25%, 20%-25% ROC, we'll be definitely looking at that. The point is we believe in a organic growth rather than an inorganic growth. As far as the acquisition or anything is concerned, at this point of time is being ruled out.
I don't know whether this question was asked or not. In our assumption of 125 basis points of margin expansion, do we take any benefit from U.K.-India FTA trade?
I t's inclusive of all because there will be some pluses and some minuses. We can't predict what kind of the global and geopolitical situation arise. Taking into account all these things, I think we are confident to deliver on 125 basis point improvement.
Okay. That includes U.K.-India FTA trade benefit as well. Thank you, sir
Thank you. The next question is from the line of Karan Kamdar from Choice Institutional Equities. Please go ahead.
Hello, sir. Thank you for the opportunity. Congratulations on a really great set of numbers. First question I had is what kind of pricing power do we have across markets, at least our top markets? If you can help me with what our top markets are in terms of salience. When can we actually do the revisions? Are there any legal restrictions or not on pricing revisions? Secondly, we say I really appreciate the goal of reaching the INR 1,000 crore mark, and we are seeing 25% CAGR to reach it in three years. What kind of brands are our high conviction brands, and what kind of geographies are we betting on?
Your first question is regarding the pricing power. As you are aware that, state excise policies, generally when the industry represent about the reason for seeking the price increases and all that, in the scenario the state government consider now is positively because their concern is also the revenue and all that. As we said that seven to eight state has already given, this is a continuous process which the industry associations keep doing with the state governments. Some of the talks are still on and all that because of the cost push being faced by the industry. That is I can't say that which are the states, but yes, it is an ongoing process. Regarding your second question regarding?
Sir, part two luxury market, what are we sort of betting on? What are our top brands that we are focusing on for turning INR 475 crores into INR 1,000 crores? I'm sure we'll show luxury as a separate line item as well when we reach there. What are we betting on in terms of brands and geographies?
Our guidance first of all is for the next year, 25%, not for three years. Next year our guidance is 25%. After that we will see. We are very confident on our luxury portfolio because we are seeing growth coming from everywhere.
Okay. Nothing, no particular product or category that we are betting on?
No, no. Like Rampur Indian Single Malt, the Expressions of Rampur, the Virasat Indian Single Malt, The Spirit of Kashmyr, Jaisalmer, Royal Ranthambore, all these brands.
Okay, got it, sir. Sir, if you can just list out, what are top three states and what salients we have in those states, that would be very helpful.
The top three states are Uttar Pradesh, Andhra Pradesh, and Rajasthan. We are actually pretty well spread out on our saliency. North, south, everywhere I think Radico is growing. These are the three big states.
Okay. Thank you, sir, and all the best for the future.
Thank you. The next question is from the line of Nitin Awasthi from InCred Research. Please go ahead.
Hello, sir. One, I would like to know, given that MML is right now established in Maharashtra and stabilizing, and you have a JV there which is allowing you to participate within that industry, and you've already lined up some pretty eye-catching products. Given that the competitors within said segment would not always be backed by large companies such as yourself, given that, do you expect the JV in Maharashtra to take a substantial portion of this increasing market?
We are aiming about 10%-15% of the MML category. We just launched it a couple of months back and the response to the brand is quite encouraging.
Yes, sir, that is definitely there. I've seen the products within the range, and of course, there is no debate that your products stand out across the line, you know, in that category. Given that this distribution strength you could obtain backing of the main company, the growth of course there is going to be substantially high if this entity stabilizes. Now here, given that the growth is going to be coming from this segment and that's the market you are aiming at, is there more investment going to be made in the JV?
No. The JV is self-sufficient.
Okay. Even for this, growth that I'm sorry, even for this market share grab that you are looking at?
Yeah, absolutely. It's more of creating the brand and the distribution leverage, and the JV itself is throwing a lot of cash. I think there's no requirement of any investment there.
Understood, sir. Understood. Next question on the UP side. UP IML, we are always in top two. We sometimes number one, number two. Financial year 2026, where have we ended at? We ended it at number one position, number two position officially?
We are number one.
Okay, currently we have moved to number one. Okay. Within the space of UP IML, the UP ML segment, the growth there and how much market are we aiming to capture there? First of all, is the segment itself as exciting as the state policy makes it to be and are the consumers also as excited about this segment?
Our market share there is about close to 26%, 25%, 26%. We are aiming at the normal growth what the market will be having. We are not looking at a abnormal growth there.
Understood, sir. In particular on the UP ML segment? The excitement is there as the state makes it to be?
The consolidated, we are talking about 24%-25% market share in UP ML and UP CL. Nitin, ultimately our objective and our focus area core business is on IMFL side , which continues to grow in very, very strong double digit. 20% is our guidance, and we continue to focus on that across markets.
Understood, sir. Thank you.
As there are no further questions from the participants, I now hand the conference over to the management for closing comments.
The current environment reinforces the strength and resilience of Radico Khaitan's business model, strong operating performance, margin expansion and improved return ratio and healthy cash flow generation. Respect the quality of our growth and impact of the disciplined execution. With a differentiated premium-led portfolio, a robust balance sheet and continued focus on financial discipline, we are well-positioned to navigate near-term uncertainties and sustain our profitable growth trajectory. We remain confident in road ahead and committed to creating long-term value for our stakeholders. Thanks for joining us today. I look forward to connecting with you next quarter. Thank you.
Thank you. On behalf of DAM Capital Advisors, that concludes this conference. Thank you for joining us. You may now disconnect your lines.