Note: This post was originally written on 27/06/13.
Although i don’t drink but I am a firm believer of the phrase " Khushi ho ya gham...banda piyega RUM". Keeping the faith, I bought United spirits @ 600 and will be selling it around 2700-2800 soon as and when market recovers.
Radico Khaitan is also one of the best premium alcohol player in india Its brands includes 8Pm whisky, Contessa rum, Morpheus Brandy. It is the largest supplier to Indian army. As advertising isn’t allowed for alcohol products in india, hence for any foreign brand coming to india, it is a must to forge a partnership with any established Indian brand or acquire it (like Diegeo did by buying United spirits, although Vijay Mallaya sold due to poor financial status of the group as a whole), so as to benefit from the distribution reach of the Indian brand.
Radico has the second largest capacity in india. It has around 40000
retail outlets all over india, which may lure any foreign partner to forge partnership with it. Over time radico is moving towards high quality premium products which are of high margin, for this it is focusing and expending big on brand promotion by engaging celebrities like Hrithik roshan. It has already launched 8PM apple juice as surrogate product for advertisement.
40% of the shares are with FII and 40% with promoters, leaving just 20% in the hands of public. It is available at a PE ratio of just 17, which is very low for 70 year old established brand keeping in view the high demand phase of Indian alcohol sector due to changing demography and is expected to double by 2017.
Indian will now learn to drink premium quality alcohol, because still even most of our astute drinkers can’t differentiate between whisky made of Molasses or Grain. What we are drinking as Grain is also a Blend of whiskies from many distilleries. Hence share of single Malt and wine is expected to grow.
Another USP of Radico is very attractive packaging which also add to the royal touch of a premium product.
In very highly regulated Indian alcohol market where it is very difficult to get a new licence let alone to build a distribution force of 40000 retail outlet, Radico is strongly poised for a rerating. I am buying it around 100/- its lowest in many years. It touched 50/- during the terrible lows of 2008-09 meltdown of world markets.
Of late it is selling famous premium Japanese brands like suntory in india. Japanese brands managed to challenge the western hold from the premium whisky segment and they are growing very fast in western market.
Perception of the western countries towards indian whiskey is one of a low quality. However of late some of indian brands have managed to change this view. Like Amrut Distillery , one of the oldest indian premium brand, they did this by launching an innovative campaign. Their whiskey was offered to general public in western countries as a branded western whiskey, everybody praised the product...but when they were told that it was an indian one, they were shocked and expressed their willingness to buy the same if it was available in their market. Today Mohun's whiskey is fully exported, but still demand is way more than its supply. They are now planning to launch their premium products in india also.
The only thing which is hindering the growth is devil like taxes by state Govt. Alcohol is taxed by some 40-50% in india. Worst hit is the poor man, who just want one or two pegs of whiskey after a hard day of work just to relax his ailing body and nervous but only to find that good quality whiskey is way too costly for him. So he is left with no other option but to buy a substandard local made one with terrible quality which often leads to deaths everywhere in the country and people condemn alcohol for the same. However the bigger culprit is the govt.
As per media reports, suntory is looking to buy a stake in Radico Khaitan which can be trigger for a rally in the stock. Just as we are moving towards premium phrase...premium clothes, premium shoes, premium mobile sets and other electronic items...so next is premium alcohol brands.
I have bought Radico at an average price of 95/- now it is at 122/- A good buy if it falls anywhere between 110 to 120/-
Regards
(Views are personal and should not be taken as a recommendation for buy or sell a stock. Stock markets are inherently risky so kindly do your Due Diligence before investing)
Although i don’t drink but I am a firm believer of the phrase " Khushi ho ya gham...banda piyega RUM". Keeping the faith, I bought United spirits @ 600 and will be selling it around 2700-2800 soon as and when market recovers.
Radico Khaitan is also one of the best premium alcohol player in india Its brands includes 8Pm whisky, Contessa rum, Morpheus Brandy. It is the largest supplier to Indian army. As advertising isn’t allowed for alcohol products in india, hence for any foreign brand coming to india, it is a must to forge a partnership with any established Indian brand or acquire it (like Diegeo did by buying United spirits, although Vijay Mallaya sold due to poor financial status of the group as a whole), so as to benefit from the distribution reach of the Indian brand.
Radico has the second largest capacity in india. It has around 40000
retail outlets all over india, which may lure any foreign partner to forge partnership with it. Over time radico is moving towards high quality premium products which are of high margin, for this it is focusing and expending big on brand promotion by engaging celebrities like Hrithik roshan. It has already launched 8PM apple juice as surrogate product for advertisement.
40% of the shares are with FII and 40% with promoters, leaving just 20% in the hands of public. It is available at a PE ratio of just 17, which is very low for 70 year old established brand keeping in view the high demand phase of Indian alcohol sector due to changing demography and is expected to double by 2017.
Indian will now learn to drink premium quality alcohol, because still even most of our astute drinkers can’t differentiate between whisky made of Molasses or Grain. What we are drinking as Grain is also a Blend of whiskies from many distilleries. Hence share of single Malt and wine is expected to grow.
Another USP of Radico is very attractive packaging which also add to the royal touch of a premium product.
In very highly regulated Indian alcohol market where it is very difficult to get a new licence let alone to build a distribution force of 40000 retail outlet, Radico is strongly poised for a rerating. I am buying it around 100/- its lowest in many years. It touched 50/- during the terrible lows of 2008-09 meltdown of world markets.
Of late it is selling famous premium Japanese brands like suntory in india. Japanese brands managed to challenge the western hold from the premium whisky segment and they are growing very fast in western market.
Perception of the western countries towards indian whiskey is one of a low quality. However of late some of indian brands have managed to change this view. Like Amrut Distillery , one of the oldest indian premium brand, they did this by launching an innovative campaign. Their whiskey was offered to general public in western countries as a branded western whiskey, everybody praised the product...but when they were told that it was an indian one, they were shocked and expressed their willingness to buy the same if it was available in their market. Today Mohun's whiskey is fully exported, but still demand is way more than its supply. They are now planning to launch their premium products in india also.
The only thing which is hindering the growth is devil like taxes by state Govt. Alcohol is taxed by some 40-50% in india. Worst hit is the poor man, who just want one or two pegs of whiskey after a hard day of work just to relax his ailing body and nervous but only to find that good quality whiskey is way too costly for him. So he is left with no other option but to buy a substandard local made one with terrible quality which often leads to deaths everywhere in the country and people condemn alcohol for the same. However the bigger culprit is the govt.
As per media reports, suntory is looking to buy a stake in Radico Khaitan which can be trigger for a rally in the stock. Just as we are moving towards premium phrase...premium clothes, premium shoes, premium mobile sets and other electronic items...so next is premium alcohol brands.
I have bought Radico at an average price of 95/- now it is at 122/- A good buy if it falls anywhere between 110 to 120/-
Regards
(Views are personal and should not be taken as a recommendation for buy or sell a stock. Stock markets are inherently risky so kindly do your Due Diligence before investing)
No comments:
Post a Comment