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Established in 1943, Radico Khaitan (RKL) is one of the largest players in the Indian IMFL industry. Formerly known as Rampur Distillery it was bought in 1972 by Dr. Lalit Khaitan and his father as part of their family business. In 1999, RKL launched and started marketing its own brands with different and new concepts. It became the first company to conceptualize the innovative idea of offering scotch blended whisky and the first company to position 8PM as India's premium whisky. Today, Radico Khaitan operates three distilleries and one JV with total capacity of 150 million litres. It also has 33 bottling units spread across the country. Investment Rationale:  Low per capita consumption of alcohol in India  Favorable pricing environment expected for IMFL industry  Increasing share of premium products  Pan-India distribution and bottling network  Focus on debt reduction will help reduce interest payout and increase PAT margin  Favorable demographics  Strong portfolio of brands Concerns:  Change in taxation and regulatory environment  Increase in raw material prices  Competition from existing and new local and international players  Seasonality in business (Q3 is the best and Q4 is the worst)  High working capital requirements

View and Valuation: Management expects key raw material prices like ENA, glass bottles, etc. to remain stable going forward which should lead to better margins as product mix shifts towards higher-margin “Prestige and Above” products. Expected increase in prices and traction in new product launches would drive the topline growth for the company. Its strong nation-wide presence in the IMFL segment, established brands along with consistent growth in scale of operations and comfortable financial risk give strength to the company. While earnings could rise gradually, valuation may rise faster.

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http://hdfcsec.com/Share-Market-Research/Research-Details/StockReports/3016500