Release Date: May 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Prestige & Above category brands grew by 14% year-on-year, with overall growth during FY24 at 20%.
- Magic Moments vodka recorded 6.3 million cases sales during the year, with a gross sales value of INR1,000 crores.
- Morpheus Super Premium brandy and 1965 Spirit of Victory Premium rum crossed the 1 million case sales for the second consecutive year.
- Royal Ranthambore whiskey's volume more than doubled, and the company signed an endorsement deal with Bollywood star Saif Ali Khan.
- The company successfully launched Kohinoor Reserve Indian dark rum, priced at about USD50 per bottle, targeting global markets including the USA, UK, EU, and Asia.
Negative Points
- Total IMFL volume reported a degrowth of 1.2% on a year-on-year basis.
- The cost of grain, ENA, and glass has been volatile, leading to significant pressure on gross margins.
- Regular category volume was impacted due to strategic rationalization of the portfolio and certain state-specific excise policy changes.
- The company faced challenges due to election-related disruptions, including dry days and excise officer availability.
- There was a 150 basis points compression in gross margin in Q4 compared to the full year, indicating cost pressures.
Q & A Highlights
Q: My first question is on the raw material scenario in FY25. You mentioned that good monsoons are expected, leading to a gradual softening of ENA and grain prices. Will this be more pronounced in H2?
A: We see early signs of declining grain prices, but it's early. The government has extra stock and plans to dispose of it, which should impact prices. We expect some impact in Q1, but more significant effects from Q2 onward.
Q: In a Lok Sabha election year, there are disruptions for the liquor sector. What kind of disruption do you expect this time?
A: The election period from April to early June will have several dry days and officials on duty, impacting primary sales and payment releases. However, this is temporary and should normalize after June 3 or 4.
Q: How confident are you in maintaining the current trajectory of 16% sales growth in the P&A category, given the broader slowdown in discretionary spending?
A: We have a strong portfolio of premium brands and expect to deliver more than 15% growth in the P&A category in FY25. Quarterly variations are less significant; we focus on long-term growth driven by our diverse and premium product offerings.
Q: What kind of realization growth can we expect in FY25 for the P&A category?
A: On an annualized basis, we expect a 500 to 600 basis points impact on realization due to product mix improvements. This should translate to a 6-percentage-point realization growth.
Q: How should one foresee regular volumes in FY25 given the current scenario?
A: We expect a 3% to 4% growth in the regular category in FY25. The election and excise policy delays have impacted volumes, but we anticipate recovery post-election and with softening raw material prices.
Q: What is the outlook for the non-IMFL business in FY25?
A: We expect non-IMFL revenue to reach around INR1,600 crores in FY25, with margins stabilizing between 8% to 9%.
Q: How has the performance of the export segment been during FY24 versus FY23?
A: Our luxury portfolio continues to grow and expand internationally. We registered a 10% increase in export sales compared to last year, with a focus on value creation and expanding our luxury portfolio in travel retail.
Q: What percentage of your sales is from the luxury, semi-luxury, and super-premium categories?
A: These categories account for around 12% to 13% of our total sales by value.
Q: Do you have enough capacity to support growth in your luxury and super-premium brands over the next one to two years?
A: Yes, we have tripled our capacity for Jaisalmer Gin and invested significantly in maturation for Rampur, ensuring sufficient capacity to support growth.
Q: What is Radico Khaitan's market share in India?
A: Our overall market share is around 8%. However, in the premium segment, our market share is higher, around 13% to 14%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
