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C.M.P: Rs.125.50 1 Year Comparative Graph RADICO KHAITAN LTD Stock Data Sector Face Value(Rs) Breweries & Distilleries Rs.2.00 52 wk. High/Low (Rs.) Rs.136.50/62.50 Volume (2 wk. Avg.

com RADICO KHAITAN LTD Target Price: Rs.144.00 BSE SENSEX BUY May 5 th, 2010 SYNOPSIS Radico Khaitan (RKL) is one of India's oldest and largest liquor manufacturers.

The company entered into 50:50 joint ventures with Diageo Radico Distilleries to market Masterstroke Whisky. The company has more than 35,000 shareholders.

The company owns largest distilleries in Asia and produces Extra Neutral Alcohol from molasses and grains. It is the largest exporter of Extra Neutral Alcohol from India.

1 C.M.P: Rs Year Comparative Graph RADICO KHAITAN LTD Stock Data Sector Face Value(Rs) Breweries & Distilleries Rs wk. High/Low (Rs.) Rs /62.50 Volume (2 wk. Avg.) BSE Code Market Cap(Rs in Mn) Share Holding Pattern V.S.R. Sastry Equity Research Desk vsrsastry@firstcallindiaequity.com Dr. V.V.L.N. Sastry Ph.D. Chief Research Officer drsastry@firstcallindia.com RADICO KHAITAN LTD Target Price: Rs BSE SENSEX BUY May 5 th, 2010 SYNOPSIS Radico Khaitan (RKL) is one of India's oldest and largest liquor manufacturers. Formerly known as Rampur Distillery which was established in The Company s manufacturing plants are located at Uttar Pradesh, Rajasthan, Andhra Pradesh, Uttaranchal and Haryana. The company entered into 50:50 joint ventures with Diageo Radico Distilleries to market Masterstroke Whisky. The company has more than 35,000 shareholders. It is the most profitable company in the domestic liquor industry. The company has presence in 30 countries and offers a unique 5cl Sachet pack for greater market penetration. The company owns largest distilleries in Asia and produces Extra Neutral Alcohol from molasses and grains. It is the largest exporter of Extra Neutral Alcohol from India. RKL has set up a second grain-based distillery in Aurangabad, Maharashtra with an investment of Rs136 crore. The Company plans to capture significant volumes into the high liquor consuming markets like Kerala, Tamil Nadu, and Andhra Pradesh and increase its market share in other existing markets The Company aims to achieve sales volume of more than 20 million cases per year in next 2 years. Net Sales and PAT of the company are expected to grow at a CAGR of 6% and 18% over 2008 to 2011E respectively. Financials (Rs in Mn) FY08 FY09 FY10E FY11E Net Sales EBIDTA PAT EPS P/E F I R S T C A L L R E S E A R C H 1

2 Peer Group Comparison Name of the company CMP(Rs.) Market Cap.(Rs.Mn.) EPS(Rs.) P/E(x) P/BV(x) Dividend (%) Radico Khaitan United Spirits United Brew Empee Dist Investment Highlights Q3 FY10 Results Update RADICO KHAITAN LTD disclosed results for the quarter ended December Net sales for the quarter moved up 34.24% to Rs million as compared to Rs million during the corresponding quarter last year. During the quarter, PAT is increased to Rs million from Rs. (68.04) million in previous year same quarter. The Basic EPS of the company stood at Rs.1.12 for the quarter ended December Quarterly Results - Standalone (Rs in mn) As At Dec-09 Dec-08 %Change Net sales % PAT (68.04) 269% Basic EPS 1.12 (0.66) 269% 2

3 Basic EPS of the company stood at Rs

4 Allotment of Equity Shares Radico Khaitan Ltd has allotted equity shares of Rs 2/- each to the eligible employees on exercise of stock options under the Employees Stock Option Scheme 2006 (ESOP) of the Company. The paid up Equity Share Capital of the Company post allotment is 13,18,93,464 Equity Shares of Rs 2/- each aggregating Rs. 26,37,86,928/-. Radico Khaitan allots 2,89,19,000 equity shares to QIB Radico Khaitan has approved the allotment of 2,89,19,000 equity shares of Rs 2 each at a price of Rs per equity share, which includes a premium of Rs per equity share, aggregating Rs 3,41,79,36,610 to Qualified Institutional Buyers (QIB). Break Up of Expenditure 4

5 Company Profile Radico Khaitan (RKL), established in 1943 as Rampur Distillery, is one of the India's oldest and largest liquor manufacturers. The company owns three millionaire brands namely 8 PM Whisky, Contessa Rum and Old Admiral Brandy. Its 8 PM Whisky brand sold one million cases in first year alone creating a record or any Indian or foreign brand operating in India. Due this it became first brand in the liquor industry to make it to the Limca Book of Records. Radico Khaitan has been successful in creating brands in various segments of whisky, rum, brandy, vodka and gin. In 1997 the company got merged with Abhishek Cement and was renamed as Radico Khaitan. Its Rampur distillery located at Uttar Pradesh is one the largest distilleries in India and a leading manufacturer of Extra Neutral Alcohol, Rectified Spirit and Anhydrous Alcohol. Recently grain distillery was added to the existing distillery increasing it production capacity from 60 million litres p. a to 90 million litres p.a. Company s manufacturing plants are located at Uttar Pradesh, Rajasthan, Andhra Pradesh, Uttaranchal and Haryana.The company entered into 50:50 joint venture with Diageo Radico Distilleries to market Masterstroke Whisky. The company has presence in 30 countries and offers a unique 5cl Sachet pack for greater market penetration. The company owns largest distilleries in Asia and produces Extra Neutral Alcohol from molasses and grains. It is the largest exporter of Extra Neutral Alcohol from India. Company Products Whisky It launched 8 PM whisky in 1999, which later became one of the biggest brands. Later it launched various brands like Whytehall, Rampur No.1, Radico Supreme Gold, Special Appointment and Old Admiral. Rum Under this it has launched 8 PM Bermuda, Contessa and Old Admiral. 5

6 Brandy It markets brandy under the name Old Admiral and 8 PM Excellency Brandy. Vodka It markets vodka under brand name Contessa and Magic Moments (remix and grain). It also manufactures Gin and markets under the brand Magic Moment and Contessa. Distilleries & Units Rampur Distillery Rampur Distillery is one of the largest distilleries in India and a leading manufacturer of Extra Neutral Alcohol (used in manufacturing Indian Made foreign Liquor) it also manufacturers Rectified Spirit (used in manufacturing of lower segments Country Liquor) and manufacturing of Anhydrous Alcohol or Ethanol or Gasohol (used in Petrol Mixing) and the recent addition of grain distillery. At present with a production capacity of 60 million liters p. a and with the recent addition of the grain distillery which has taken the capacity up to 90 million lit p.a it is one of the largest distilleries in the country The Unit has a series of firsts to its credit: It is the first Indian distillery to obtain ISO 9001:2000 certifications. It has achieved capacity utilization of over 100% in the alcohol plant. It is the first environment-friendly distillery in the country. Capacity Molasses Distillery 60 million litres per annum. Grain Distillery 30 million litres per annum. Malt Distillery 460 thousands liters per annum. The overall licensed capacity has been increased to 125 million liters per annum. 6

7 Own Bottling Units Rampur Distillery has 14 state-of-the-art bottling lines, including those imported from Italy, equipped with tunnel bottle washing, filling, sealing and labeling machines with a capacity to produce 1500 cases (1 case = 12 bottles of 750 ml each) of liquor in a single shift of operation. Line capacities vary from 750 cases to 3,000 cases in a shift. To keep pace with the growing demand, Radico Khaitan has significantly increased its bottling capacity by acquiring/setting up bottling plants in the states of Rajasthan, Uttranchal and Andhra Pradesh. Rampur Distillery, Rampur (Uttar Pradesh). Radico Khaitan Limited Malt spirit Plant, Rampur. Radico Khaitan Ltd., Bajpur (Uttaranchal). Radico Khaitan Ltd., Reengus (Rajasthan). Radico Khaitan Limited Grain Spirit Plant. Radico Khaitan Ltd., Hyderabad (Andhra Pradesh). Strategic Bottling Units Radico Khaitan Ltd is working continuously towards increasing its reach through the strategic bottling units across the country. The focus underlines comprehensive quality control and enhanced market penetration. NORTH N V Distilleries & Breweries Ltd., (Punjab). Himalayan Gold Distilleries (Himachal Pradesh). Oakland Bottlers (P) Ltd. (Jammu & Kashmir). M/s Rajasthan Liquors Pvt Ltd Derabassi (Punjab). M/s NID Jammu. 7

8 EAST Goodhost Liquors (P) Ltd., Patna, (Bihar). M/s Prashant Impex Dankuni, Kolkata, (West Bengal). Seven Sisters Trade & Distilleries (P) Ltd., Guwahati.(Assam). Bacchus Bottling (P) Ltd., (Orissa). United Brothers Distilleries (P) Ltd., (Arunachal Pradesh). Gemini Distilleries (Jharkhand) (P) Ltd., Ranchi, (Jharkhand). M/s Uno-Koti Bottling Tripura. M/s North-East Bottling Shillong Meghalaya (To be closed in ). SOUTH Kamal Wineries, Hyderabad (Andhra Pradesh). M/s Gauthami Agro Eluru (Andhra Pradesh). Ravikumar Distilleries (Pondicherry). United Distillery, Calicut, (Kerala). Sri Venkateswara Distilleries, Bangalore, (Karnataka). BT & FC (P) Ltd., Bangalore, (Karnataka). Midas Golden, Chennai, (Tamil Nadu). M/s EMPEE DISTILLERIES CHENNAI. M/S SAFIL CHENNAI (Being started in ). DRDPL (DIAGEO-RADICO) M/S CHAMUNDI BOTTLING BANGALORE. WEST M/S BMSS SHRIPUR (Maharashtra). Welcome Distilleries, Bilaspur. (Chattisgarh) Silver Start Distillery, (Daman). Gwalior Distillers, Gwalior (Madhya Pradesh). DRDPL (DIAGEO-RADICO) M/S AABPL-BARWAHA, INDORE (Madhya Pradesh). 8

9 Strengths Strong Financials. Wide distribution network. Effective advertising. Opportunities The Company plans to capture significant volumes into the high liquor consuming markets like Kerala, Tamil Nadu, and Andhra Pradesh and also to increase its market share in the other existing markets. Company aims to achieve sales volume of more than 20 million cases per year in next 2 years. The Company has also re-launched its 'Royale Whytehall' whisky in new pack in the key markets. Company believes that its branded portfolio constitutes significant value creation for its shareholders. The key drivers for growth of the company in future would be launching of new brands and increase in the volumes in various markets, acquisitions of brands and creation of own production facilities for bottling, major thrust to exports including bottling arrangements abroad. Threats Higher prices of Molasses. Industry suffers from high levels of duties and taxes. 9

10 Financials Results 12 Months Ended Profit & Loss Account (Standalone) Value(Rs.in million) FY08A FY09A FY10E FY11E 12m 12m 12m 12m Description Net Sales Other Income Total Income Expenditure Operating Profit Interest Gross Profit Depreciation Profit before Tax Tax Profit after Tax Equity Capital Reserves Face Value(Rs) EPS *A=Actual, *E=Estimated 10

11 Quarterly Ended Profit & Loss Account (Standalone) Value(Rs.in million) 30-Jun Sep Dec Mar-10 Description 3m(A) 3m(A) 3m(A) 3m(E) Net Sales Other Income Total Income Expenditure Operating Profit Interest Gross Profit Depreciation Profit before Tax Tax Profit after Tax Equity Capital Face Value *A=Actual, *E=Estimated EPS Key Ratios Particulars FY08 FY09 FY10E FY11E EPS (Rs.) EBITDA Margin (%) 11.77% 11.59% 16.71% 16.86% PAT Margin (%) 4.09% 0.94% 5.23% 5.69% P/E Ratio (x) ROE (%) 14.01% 2.95% 16.83% 17.01% ROCE (%) 9.83% 6.24% 11.78% 12.38% EV/EBITDA (x) Debt-Equity Ratio Book Value (Rs.) P/BV

12 Charts: 12

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14 Outlook and Conclusion At the current market price of Rs , the stock is trading at x FY10E and x FY11E respectively. Price to Book Value of the stock is expected to be at 4.85 x and 4.02 x respectively for FY10E and FY11E. Earning per share (EPS) of the company for the earnings for FY10E and FY11E is seen at Rs.4.35 and Rs.5.30 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 6% and 18% over 2008 to 2011E respectively. The company has more than 35,000 shareholders. It is the most profitable company in the domestic liquor industry. The company has presence in 30 countries and offers a unique 5cl Sachet pack for greater market penetration. RKL has set up a second grain-based distillery in Aurangabad, Maharashtra with an investment of Rs136 crore. The Company plans to capture significant volumes into the high liquor consuming markets like Kerala, Tamil Nadu, and Andhra Pradesh and increase its market share in other existing markets The Company aims to achieve sales volume of more than 20 million cases per year in next 2 years. On the basis of EV/EBITDA, the stock trades at 9.02 x for FY10E and 7.98 x for FY11E. We expect that the company will keep its growth story in the coming quarters also. We recommend BUY in this particular scrip with a target price of Rs for Medium to Long term investment. 14

15 Industry Overview Globally, over 133 billion litres of beer is sold each year. In comparison, the Indian beer Industry contributes a meagre 1.28% of the global sales. The industry has been witnessing on an average, a steady growth of about 10% per year over the last ten years with volumes crossing 172 million cases in from 70 million cases in With a relatively younger population and income levels on the rise, India is seeing an increase in the popularity of beer. Consumption of beer in India is also constrained by lack of adequate market infrastructure. In China for instance, there is one outlet for every 300 persons. In contrast, India has one outlet for every 21,000 persons hampering free availability of beer. Total consumption of beer in China grew by 33.56% between the years 2000 and 2006 to reach a total market volume of billion litres. With a per capita consumption of 22 litres, China is one of the largest beer consuming nations in the world. Though beer is a milder form of alcohol, it is taxed by most states on the same basis as Spirits. The charge is on absolute alcohol basis. Globally on a per unit of alcohol basis, beer bears approximately 50% of levies imposed on Spirits whereas in India taxation is regressive on beer. India is predominantly a hard liquor market and beer has a minority preference amongst those who consume alcohol. The per capita consumption of beer constitute a meagre 3% of global average. Typically the size of beer volumes in most countries is 7 to 10 times larger than spirits, whereas in India, spirits is larger. The alcoholic beverage industry in India operates under a very complex regulatory environment which is the biggest challenge. In addition to restrictions on advertising, distribution infrastructure and retailing, varied tax structures, controlled pricing and licensing make operations more complex, consequently leading to higher costs, though providing entry barriers for new entrants as well. 15

16 The Indian beer market is dominated by strong beer which accounts for 74% of the total beer sale. The market for alcoholic beverages has been growing consistently. 'The Future of Wine', a report on the state of the wine industry over 50 years, suggests that the market for wine in India was growing at over 25 per cent per year. Disclaimer: This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information contained herein is from publicly available data or other sources believed to be reliable but do not represent that it is accurate or complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it s affiliates shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. This document is provide for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. 16

17 Firstcall India Equity Research: B. Harikrishna Banking B. Prathap IT A. Rajesh Babu FMCG C.V.S.L.Kameswari Pharma U. Janaki Rao Capital Goods E. Swethalatha Oil & Gas D. Ashakirankumar Auto Kavita Singh Diversified Nimesh Gada Diversified Priya Shetty Diversified Neelam Dubey Diversified Firstcall India also provides Firstcall India Equity Advisors Pvt.Ltd focuses on, IPO s, QIP s, F.P.O s,takeover Offers, Offer for Sale and Buy Back Offerings. Corporate Finance Offerings include Foreign Currency Loan Syndications, Placement of Equity / Debt with multilateral organizations, Short Term Funds Management Debt & Equity, Working Capital Limits, Equity & Debt Syndications and Structured Deals. Corporate Advisory Offerings include Mergers & Acquisitions(domestic and cross-border), divestitures, spin-offs, valuation of business, corporate restructuring-capital and Debt, Turnkey Corporate Revival Planning & Execution, Project Financing, Venture capital, Private Equity and Financial Joint Ventures Firstcall India also provides Financial Advisory services with respect to raising of capital through FCCBs, GDRs, ADRs and listing of the same on International Stock Exchanges namely AIMs, Luxembourg, Singapore Stock Exchanges and other international stock exchanges. For Further Details Contact: 3rd Floor,Sankalp,The Bureau,Dr.R.C.Marg,Chembur,Mumbai Tel. : / / Telefax : info@firstcallindiaequity.com 17

BUY SYNOPSIS. NORTH EASTERN CARRYING CORPORATION LTD Result Update (PARENT BASIS): Q1 FY15. CMP Target Price SEPTEMBER 12 th 2014

BUY SYNOPSIS. NORTH EASTERN CARRYING CORPORATION LTD Result Update (PARENT BASIS): Q1 FY15. CMP Target Price SEPTEMBER 12 th 2014 BUY CMP 82.30 Target Price 92.00 NORTH EASTERN CARRYING CORPORATION LTD Result Update (PARENT BASIS): Q1 FY15 SEPTEMBER 12 th 2014 ISIN: INE553C01016 Index Details Stock Data Sector Transportation - Logistics