The Hindu Business Line : Radico Khaitan hits 52-week high on revamp proposals

The stock today was quoted at its 52-week highs of Rs 149, but finished at Rs 140, up 3 per cent on the BSE. Around 1.85 lakh shares were traded on the NSE, compared with the 20-day daily average volume of around 33,000 shares. On the BSE 56,927 shares were traded, out of which 21,808 (38 per cent) were marked for delivery.

At today's closing price, the stock traded at 12 times its trailing twelve-month earnings of Rs 12 per share.

The proposed merger of Whytehall India Ltd and Anab-e-Shai Wines & Distillers with Radico Khaitan Ltd (RKL) has opened up an increased earnings prospect, observed Mr Devarsh Vakil of Anagram Stockbroking.

Originally established by a European company in 1943, it was taken over by Khaitans in the 1970s. At present, 56.20 per cent of RKL's equity is held by the Khaitan family, 5.41per cent by mutual funds, banks, insurance companies and financial institutions. The balance 38.39 per cent is held by the public.

According to Mr Vakil, RKL's position in the Indian liquor industry is strengthening as reflected in increasing volumes of its popular IMFL brands such as 8 PM whiskey, Contessa rum and Old Admiral VSOP brandy. The cost reduction efforts undertaken by the company have resulted in improved profitability.

Last month Radico Khaitan bought out Bacardi group's 51 per cent stake in Whytehall India for Rs 30 crore. Whytehall was a 51:49 joint venture between Bacardi and Radico. The acquisition is part of Radico's expansion plan. Whytehall sells around half-a-million cases annually of Indian made Bacardi.

Radico Khaitan has also planned to extend its successful brand Old Admiral brandy to other items such as whisky, rum and mineral water.

As a part of its newly launched ad campaign, it has signed Bollywood star Katrina Kaif as its brand ambassador. The consolidation of the wine business is also expected to improve its product basket and volumes.

Management believes that with the consumers increasingly becoming health conscious, Red and White wines are preferred with food. Wines being a lifestyle drink, may be well received by the consumers who want to have an `easy to drink' beverage.