Radico Khaitan: Premiumisation Is Working, and the Margins

RADICO Radico Khaitan (NSE : RADICO) makes Indian Made Foreign Liquor (IMFL). Its portfolio spans Prestige & Above (P&A) and Regular segments, with brands including Magic Moments vodka, Morpheus brandy and 8 PM whisky. P&A accounted for 53.4% of own volumes in H1FY27, up from 42.5% in H1FY26. What happened: In H1FY27, revenue grew 14.3% to Rs 3,430 crore. Gross margin expanded 530 basis points to 48.6%. EBITDA rose 50.9% to Rs 705 crore, with EBITDA margin at 20.5%, up 490 basis points. Net profit grew 67.8% to Rs 457 crore. P&A volumes grew 35.8% to 10.5 million cases while Regular & Others fell 12.5%. Total volume rose 5% to 20.01 million cases. Why it matters: The margin expansion reflects a structural shift. Premium bottles command higher prices without proportionally higher production or distribution costs. As P&A crosses 53% of own volumes, that gap flows to EBITDA. ROCE rose consistently over 12 quarters to 29.4% in Q2FY27. Net debt fell from a peak of Rs 771 crore to Rs 175 crore, giving the company room to invest in both capacity and brand. What I am watching: Radico trades at 68.4 times trailing earnings, below its five-year median of 82.2 times; the lower multiple reflects earnings growth, not a de-rating. Magic Moments vodka grew Q2 volumes 49% year on year and holds roughly 60% of India’s vodka market. Vodka is 6.3% of total IMFL industry volumes. If that category slows, the concentration risk is real. My stance: The premiumisation thesis is playing out in both margins and returns. At 68.4 times, the valuation is below its own history and earnings are catching up. The main risks are vodka-category slowdown and global spirits competition at the premium end. I do not hold a position in Radico Khaitan at the time of writing. This is not investment advice.