Radico Khaitan's Q2 FY26: A Spirited Performance Driven by Premiumization

Radico Khaitan Limited, a prominent player in India's alcoholic beverage industry, has reported a stellar performance for the second quarter of Fiscal Year 2026 (Q2 FY26). The company's financials, presented on a standalone basis, reveal robust growth across key metrics, underscoring the success of its premiumization strategy and disciplined execution. Revenue from operations (Net) surged by 33.8% year-on-year to ₹1,493.9 crore, while Gross Profit increased by 33.9% to ₹652.0 crore. This strong top-line growth translated into impressive bottom-line expansion, with Total Comprehensive Income rising by 68.9% to ₹137.8 crore. Basic EPS also saw a significant jump of 68.9% to ₹10.38, reflecting enhanced profitability and operational efficiency.

The quarter was marked by an impressive 37.8% year-on-year growth in total IMFL (Indian Made Foreign Liquor) volume, reaching 9.34 million cases. The Prestige & Above segment, a strategic focus for the company, delivered a 21.7% volume growth, achieving its highest-ever quarterly volume. This segment now contributes 48.1% to the total net revenue from operations. The Regular & Others segment also saw a sharp volume increase of 79.6%, largely driven by changes in the route-to-market in Andhra Pradesh, where Radico Khaitan's market share has surged from 10% to over 30%. Non-IMFL revenue growth stood at 26.7%, primarily due to higher bulk alcohol sales.

Strategic Initiatives and Market Traction

Radico Khaitan's robust performance is a testament to its innovation-led approach and balanced portfolio. The company has successfully launched several new products and expanded existing brands, particularly in the premium and luxury segments. The Morpheus Rare Luxury Whisky, a strategic extension of its premium portfolio, is now available in 4 states, with plans to expand to 8 more by the end of FY2026. The Spirit of Kashmyr, India's first homegrown luxury vodka, is gaining significant traction and is set to be available in 11 states by FY2026 end. These launches, coupled with the expansion of existing brands like Royal Ranthambore Whisky and After Dark Whisky, are fueling the company's growth.

Management emphasized the strategic importance of its Sitapur distillery, which is now operating at 95% capacity. This backward integration ensures a captive supply of grain-based ENA for its premium brands and facilitates malt maturation, providing a significant margin advantage of ₹6-9 per liter. This investment is crucial for supporting the high growth trajectory of the Prestige & Above portfolio. The company also streamlined its corporate structure by amalgamating subsidiaries related to the Sitapur greenfield project, bringing land holdings directly into the company.

Operational Efficiency and Financial Discipline

Operational efficiency and financial discipline were key themes for the quarter. Gross margins remained stable at 43.6%, attributed to a benign raw material environment and effective cost management. The company anticipates ENA and grain prices to remain stable or favorable for the rest of FY2026, providing continued margin support. EBITDA margin expanded by 126 basis points to 15.8%, reflecting the benefits of operating leverage. The company's advertising and sales promotion (A&SP) investment was 6.1% of IMFL revenue, within its guided range of 6% to 8%, aimed at sustaining strong brand visibility and growth.

On the balance sheet front, Radico Khaitan demonstrated strong financial prudence by reducing its net debt by ₹146.1 crore since March 2025. This reduction was driven by improved profitability and tighter working capital management. The company has a clear target to become debt-free by FY2027, aligning its leverage and liquidity decisions with long-term strategic goals. While the global trade environment posed short-term challenges for exports, the robust domestic portfolio and evolving consumer aspirations in India continue to provide significant growth opportunities.

Outlook and Future Growth

Radico Khaitan remains confident in its future growth trajectory. The company expects to surpass its 20% volume growth guidance for the full year FY2026. The management anticipates continued strong double-digit growth in the Prestige & Above category, enhanced profitability, and sustained focus on cash flow generation. The potential for policy changes in states like Delhi and Bihar, similar to the route-to-market reforms in Uttar Pradesh and Andhra Pradesh, presents significant future growth opportunities for the industry and the company. Radico Khaitan is uniquely positioned to lead the premiumization shift in the Indian spirits landscape, backed by a strong innovation pipeline, expanding distribution, and consistent brand investments, aiming for accelerated, high-quality growth both in India and across international markets.