Radico Khaitan Limited (RADICO) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Radical Ketan Limited Q4 FY26 earnings conference call hosted by TAM Capital Advisor. As a reminder, all participant lines will be in a listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Abhishek Meira. Thank you and over to you, sir.

Thank you. Good evening, everyone. We would like to thank Radhiko Khaitan's management for providing damn capital with the opportunity to host Q4 FY26 earnings call. Today we have with us Mr. Abhishek Khaitan, Managing Director, Mr. Dilip Bantia, CFO, Mr. Sanjeev Vanga, President International Business, and Mr. Sudhir Upadhyay, Chief Sales Officer. Now I would like to hand over the call to Mr. Abhishek Khaitan for his opening remarks. Thank you, and over to you, sir.

Good afternoon, ladies and gentlemen, and thank you for joining us on Radical Khaitan Q4 FY26 Earnings Conference Call. FY26 has been an important year for Radical Khaitan and in many ways an inflection point in our journey. The business delivered a strong performance, supported by disciplined execution, a richer portfolio mix, We have continued focus on value-led growth. During the year, we crossed two key milestones, with net revenue exceeding 6,000 crores and EBITDA crossing 1,000 crores. These achievements reflect the sustainability of our business model, the strength of our brands, the investments we have made over the years, and the growing scale of our premium and luxury portfolio. Our prestige and above segment continued to lead growth, while our luxury portfolio delivered sales value of 475 crores, in line with our guidance. We expect to sustain this growth momentum and deliver 25% growth in FY27 in this portfolio. Our recently launched luxury brand... Rampur 1943 Virasat Indian Single Malt and the spirit of Kashmir Luxury Vodka are gaining strong traction with consumers and the trade. In February this year, globally renowned whiskey expert and author of the Whiskey Bible, Jim Moray, was in India for an exclusive tasting event of Virasat. He also visited Rampur for the opening of our latest stilt house. His earlier visit to Ramphur was nearly three decades ago, when our first malt plant was just a couple of years old. Our current single malt portfolio not only showcases the craftsmanship behind various expressions, but also reflects the growing international interest in Indian single malts. Alongside this, our broader premium portfolio continues to scale steadily across key markets, supported by sharper execution and increasing consumer pull. Royal Vanthambore Whiskey delivered an outstanding performance, growing over 50% during the year, driven by strong demand across both civil and CSD channels. Magic Moment Vodka continued its strong trajectory with 21% volume growth during the year to reach 8.6 million cases and around 1,500 crores in sales value, further strengthening its leadership in the Vodka category. During Q4, Magic Moment registered 28% year-on-year growth. New flavor innovations, including flavors of India category, are contributing to this robust momentum. Going forward, we'll continue to add more flavors as we lead disruptive growth in the category. After Dark Whiskey continued to deliver strong performance, recording over 60% growth and crossing 3.1 million cases during the year. We also continue to deepen consumer engagement through focused marketing, on-trade activations, and brand advocacy initiatives. The Royal Anthem Board Limited Edition Pack, celebrating India's six legendary tigers, brought together premium storytelling with a strong message around wildlife conservation. Our experiential campaigns and focused digital engagement further help us connect with younger consumers in a more authentic manner. As we have discussed earlier, the Onset channel continues to be a strategic priority for us. Over the last two years, we have made significant progress in building a stronger foundation, and the results have been in the line with our expectations. In FY27, we will further scale our on-trade agenda across advocacy, distribution expansion, key account partnership, and airports. These initiatives will enhance visibility, trials, consumer experience, and premium brand activations, strengthening the reach and salience of our luxury and premium portfolio. From a financial performance perspective, the year has been encouraging. A better portfolio mix, relatively benign input costs, and the benefit of scale has helped us to improve margins and returns. We will, however, continue to monitor the global environment closely, especially developments in West Asia, given the possible implications for supply chains and input costs. Looking ahead, the consumer environment remains supportive, and we remain confident about Radiko Khaitan's long-term growth opportunity. Our focus will remain on building our premium and luxury portfolio, investing behind the innovation and brand equity. During FY27, we expect to grow our prestige in our portfolio volume by 20% and expect our EBITDA margin to expand by 125 basis points for the full year. With that, I would now like to hand over the call to our CFO, Dilip Bantia, for a detailed review of our financial and operational performance. Thank you. Over to you, Dilip.

Thank you, Arushet. Thank you, everyone, for joining us on this call today. Financial Year 26 was milestone year for Eriko Khetan, with robust operating performance translating into higher profitability, improved return ratio, and enhanced cash flow, free cash flow generation. The results demonstrate the power of our premiumization strategy, growing scale advantage, improved cost stability, and disciplined financial management. During quarter 4 of financial year 26, we delivered a strong all-round performance with total IMFL volume of 9.52 million cases, reflecting a 4% increase year-on-year basis. Prestige and above category continued strong upward trajectory, recording 28% volume growth. The performance was supported by strong brand momentum. And premiumization-led product mix. Regular volume degrowth was due to a higher base in quarter four of FY25 after the change in the route to the market in the state of Andhra Pradesh and the impact of policy changes in Maharashtra and Karnataka. On the Profitability Fund, Gross margin during the quarter was 48%, representing an expansion of 450 basis points on year-on-year basis, and 150 basis points sequentially. The improvement was led by better product mix, softer raw material prices, and ongoing premiumization. We continue to monitor evolving situation in West Asia and confident of our margin expansion trajectory over the mid to long term. EBITDA margin during the quarter stood at 19%, expanding 565 basis points year-on-year, highest-ever EBITDA margin, reflecting the strength of our premium margin study, operating leverage and continued cost distribution. This margin performance is an important outcome of investment we have made over the years in building our premium and luxury portfolio. The improvement in profitability has also translated into stronger return ratios, higher operating profit, and better asset utilization have contributed to improved return on equity and return on capital employed. As the prestige and above luxury portfolio continue to scale, we expect further improvement in the overall capital efficiency of the business. Tending for the balance sheet. Net debt reduced by 329 crores during the year, driven by improved profitability and cash flow generation. Our balance sheet remains strong, and we are well on track to become debt-free in financial year 27. Capital allocation continues to be prudent and selective, with ongoing capex largely directed toward maintenance. In line with our commitment to the shareholder value, the board has articulated a strong dividend policy with a minimum payout of 20% of profit after tax. This reflects our confidence in the cash flow generation of the business and maintaining adequate flexibility to invest behind future growth opportunities. Looking ahead, while we remain mindful of our external volatility, the cost environment, operating leverage benefits, and financial discipline to provide comfort on margin sustainability and cash flow generation. Our focus will remain on driving profitable growth, strengthening the balance sheet, improving return ratio, and enhancing shareholder value. With that, we now open the line for question-answer.

Thank you. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

The first question is from the line of Aditya Suman from CLSA.

Please go ahead.

Hi, good evening, and thanks for the opportunity. So, two questions. Firstly, can you throw some light on sort of new product launch plans for fiscal 27, particularly in the prestige and above and luxury space? And second, sort of your 125 basis point EBITDA margin expansion is fairly robust given the commodity environment. So, one, how do you plan to mitigate the higher commodity costs? And is this margin expansion over full year 26 or 4Q26? Thank you.

To answer your first question about the new launches, if you see in the last year itself, we've launched three, four brands in the luxury as well as the PNA category. So we want to consolidate that. That will be our first objective. And take it nationally, like our Viratwath Indian single malt, the spirit of cashmere, right now it is in 10 states, we want to take it to 20 states. So that will be our prime focus. Plus, we've launched new flavors of magic like jamun, mango, dhandai, which we are going to again take it nationally. And in the coming year, what we feel we are going to launch is some more flavors in the Magic family, and those will be also in the flavors of India category. Plus, at the end of the year, we will be coming out with the tequila in Jawa spirit. So these are our launch plans.

And as far as the margin goes, So, on the margin front, Aritya, actually, as you have noticed that in last quarter, we have improved our gross margin by 150 basis points and EBITDA margin by 565 basis points, and we are quite confident to add 120 basis points to 125 basis points margin in the coming year 27. So, this is on an annualized basis. We have got the price increases in some of the states, which amounts to be around 60 basis points. At the same time, product premiumization will yield us more than 200 basis points. So, we will be more than mitigating the impact of the cost push, and thereafter, also, we are confident to deliver 120 to 125 basis point margin expansion.

That is very clear. Thanks very much. And just one follow-up on the margin. So will there also be some unlock, given that you had a large number of new launches last year, and so there was a huge marketing spend behind that. So could there be some unlock in marketing spend as well, given that the number of new launches is lower?

We have been actually consistent in our policy on spend in the marketing, and as we have always been guided, that 6-8% is the bracket where we spend the marketing expenses depending on the new launch and our existing flagship brand. So, we'll balance out in that. So, and as we are, top line has grown by 25% this year also. So, the increase in top line will further increase the quantum of the marketing expense.

Perfect. That's very clear. Thanks so much.

Thank you. The next question is from the line of Vishal Kutka from ASK Investment Managers. Please go ahead.

Yeah, I do congrats on extreme type of numbers. Three questions from one to my side. First is on Kannadaka state. Now, because your new policy announced by the state, the pricing differences between regular and clean has come down. So, how do you plan to capture that given that the gap has come down a bit, driving the premonition and implementation agenda that you have? Second question is around West Bengal. Now, there is a change in government that has happened. Do you think there could be a meaningful change in the way the market operates and if you can provide a framework as of now, how the market is operating as on this? And the third question is on BR state. All you hearing murmurs that prohibition could be uplifted, if you can provide an update that you are aware about. Thank you.

Hi, this is Sudhir Upadhyay. So, first of all, regarding Karnataka, which you had asked, yes, we have seen last time when Karnataka has rationalized the pricing for the premium brands, there was a significant increase which has come on the premium brands. And since we have the portfolio of the premium brands, which is like Rampo, Jasalmay, Royal Rantambo, etc., it is very well established there. We had also gained the advantage on account of this price rationalization, which has been done almost a year and a half back. Now, this time also we are anticipating the government is working on the similar line. Although the official announcement is not there, in that case, if it is going to be there, we will certainly be benefited with that. Your second point is regarding the West Bengal. West Bengal, it's too early to preempt anything because there is a change which is recently done. So we will wait and watch on what is happening on the West Bengal. And on basis of that, we will put the strategy there. We had a strong vodka base there, so we will get the benefit of that.

Sir, is this an open market or a regulatory state as of now? West Bengal?

No, it's okay. It's an open market right now, so they have a private retail sector there, but if there are any changes which is going to happen, then we will see accordingly. And the first time was demanding the Bihar. Bihar, yes, we will wait and watch. Before the probation, we used to have a large consumer base in Bihar, and it is a significantly populated state. So we will wait and watch in the case if anything happens in Bihar, we will get the benefit of it.

Thank you.

The next question is from the line of Hartheet Kapoor from Investric. Please go ahead.

Yeah, hi, good evening. So I just had three questions. One was, you know, on the initial comments on the unlock, you know, because of the distribution expansion on the luxury portfolio, you know, my understanding was that a lot of this work you had already done. I just wanted to get your sense on, you know, how much more can this benefit, whether in terms of, you know, more outlets that you can still reach on the on-trade or maybe more product in those same outlets. So what's the potential still of that? The second question was on exports. I'm sure, you know, you would have taken some impact in the last six months because of tariffs, et cetera. I just wanted to kind of get your thought on how fast that segment can grow, you know, going forward and how much impact it could have had in 26. And the third question was on the margin bit, you know, the 100 to 125 basis points, does it also take into account the fact that, are you already including the fact that there will be an India-UK FTA, you know, benefit for you, possibly in the second half of this fiscal year? Those are my three questions. Thank you.

To answer your first question regarding the expansion to the various states and on trade, I think we see that, especially with Virasad, Kashmir, all this, there's a huge scope of expanding it. And on trade also, what we had told about two years back with our luxury portfolio, has become a key focus area for Radico. So, we are adding outlets by the day, and this year, brand advocacy is one of our most important initiatives. So, we are planning to have about close to 2,000 advocacy sessions in the entree. So, I think all this put together, that is why we are confident that our luxury portfolio should grow by 25% in terms of value from 475 crores. And as far as sport goes, I think Sanjeev will answer that.

Yeah, in terms of the U.S. tariffs, at 10%, it's not make or break, especially for the luxury portfolio, where the difference on the retail end would be about $5 to $6 a bottle and all. So that's not substantial. However, the U.S. market, as it is, as you would have seen from all the other players as well, whether in the Elkabet space or anything else, is on a slightly softer note. But we are all hopeful it will bounce back pretty soon and should not have any major impact on our luxury portfolio.

Regarding the margin expansion, as you said that UK, India, FBA benefit. So, 125 business point expansion is inclusive of all. At the same time, there can be some pluses and some minuses. So, we are conservative on our listing that something goes on cost-push side and all that. 125 basis points should be delivered given the current scenario.

Great. That's it, Subhima. I'll come back to more. Thank you very much.

Thank you. The next question is from the line of Abhijit Kundu from Anti-Shock Broking. Please go ahead.

Thanks for the opportunity and congratulations on a great set of numbers. Just a follow-up on the previous question, to just clarify, excluding UK FTA and given the current environment, Radical is looking at 100 to 125 basis points improvement in masses. Is that right?

So, it is actually, as we said, with the current scenario, I can't predict if it goes much earlier than what it is today. It would be if LPG and other things go out of stock and some of the units of glass bottles or something disrupt with the production and all that. Otherwise, we are pretty confident because we see this should not happen and the geopolitical situation also should be taken care of next 15-30 days and all that. And we have a long-standing relationship with our supply chain, so we're pretty confident about continuity of the business. And given these circumstances and all, we're confident to deliver that until there is something very, very drastically negative.

Okay. And sir, what I understand is the Sitapur and Rampur Distillery, 50% of it is, you know, biomass dependent and less dependent on LPG. So, on an overall basis, I mean, you know, assuming, I mean, things are getting better, but assuming that there are issues with LPG and LPG supplies, and then there are also, that is one question, second, so what happens in that scenario? And second question is that, you know, glass prices, are you seeing any inflation right now? I mean, after your negotiations, what is the, and what is your dependence on glass? Because a major part of it would be glass. And then there is, you know, a lot of this company, a lot of alcoholic spirit companies have switched to hipsters and hence our dependence on pet. I mean, what is. So, what could be the overall impact on the current scenario? And if it increases from the current level, just slightly a view on that.

So, Avijit, actually, your first point regarding my power and fuel balancing and all that. So, it is largely 90% of our power and fuel in both the plants, Sitapur and Rampur, is biofuel driven. So, I am not at all dependent on the LPG. So, it takes care of itself and the biofuel is locally available and there are boilers, etc. and turbines which generate the power. So, in both the plants, we are self-sufficient on our captive basis. Your second question regarding the glass. As I said earlier also that we have a longstanding relationship with the glass manufacturers. We don't foresee any impact on our glass supply. At the same time, there has been some inflation in the glass prices in the last month. Around 15% of the glass price has got increased. We have factored into our costs, this thing, costing that, and after that also we're talking about the margin expansion. On the third point, as the trend is going around, and I wish you can speak much more on that, on the extra pocket pack, it is a trendier pack, and it is gaining momentum. So that is also reducing dependency on glass. So that is another feature which is coming in the demand point of view and consumer preference point of view.

Right. And we are promoting that also.

Understood, sir. And on the top line front, you know, when I look at your, I mean, growth and the sustainability of that. If we have to look at a 15% to 16% at least revenue growth for the next two years, and about a 11% to 12% volume growth, then a significant part of that would come from magic moments, vodka, after dark, 8pm black, I don't know how that is moved out. And there is a part of it which pulled Admiral where you got benefited in Andhra. So, if you have to look for this next two years, how would the scenario be in terms of your brand growth? I don't want any figures, but which would be the brand that would drive the larger, you know, 475 crores of luxury portfolio, which will grow at about 20-25%, that we understand very well, and that is doing very well. And what about the other portfolio? And then, yeah, in addition to the story, how have you seen the MNL, you know, panning out? So, has it settled down? Because that has impacted a part of Radico's volumes as well. So, how do you see that panning out going ahead?

Yeah, that's fine. If you see, after a growth of P&A has been 28% and vodka, definitely what we are seeing is a shift towards the white spirits. Like, if you see total market share of the white spirit in India is about 4.5%, whereas globally, it is 28% to 29%. So, we have still a long way to get that conversion. And I think what we are seeing with the innovations of the flavor, etc., a lot of consumers are now shifting to the white spirit. So I think in the times to come or in the current year, which we have already seen, magic will be a big driver of our growth, number one. Number two, after dark also has grown very well. It has grown by 62% and we feel that it is gaining traction. So the growth will come from there also. And we had done a repackaging or a retransformation of 8pm black in the second half of last year. And this quarter, we grew by about close to 60%. So I think growth is coming from all these three angles. So we are very confident that our P&A category volume growth for the next year will be 20%.

Thank you. The next question is from the line of Mihul Desai from GM Financial. Please go ahead. Yeah, congrats on a great set of numbers.

Firstly, just wanted to, while you did allude to Vodka segment and P&A segment being seeing a strong growth, how should one look at the realization growth here? Because obviously, the luxury portfolio is also growing pretty fast. Do you see this realization growth of, you know, low single digits that we saw in FY26 for P&A? Can that also increase? And secondly, how do you look at the regular segment growth on a steady-state basis?

So, on the realization front, as our P&A, and especially luxury is growing faster than the even P&A, so we expect that realization and volume and value, delta will be in the range of P&A to 400 basis points, as an aggregate basis. And as far as your second question, The regular segment in my opening remark I said is because of some policy and high base, this time it has re-grown in Q4. However, in the full year, we've grown by 30% on the regular side also. But this year, we expect in the range of 3 to 5% growth in regular category.

Yeah, that's the volume growth, right?

Yeah, volume.

Yeah.

Thank you. Thank you. The next question is from the line of Rahul Agarwal from Incanite Asset. Please go ahead.

Hi, sir. Good evening. This is Rahul Agarwal from ECGY Asset. Sir, the question is related to earlier questions asked on growth. 20% P&A volume growth implies about 3.5 million cases roughly additional. Similar question was the earlier analyst asked on which categories and brands will contribute. You mentioned Magic Moments, After Dark, FPM, Black, Repackaging. Are these three category or brand going to be similar to contribute to 3.5 million cases? Is there enough market for that? That's the first question. Secondly, in terms of... You know, capacity, related question to the growth outlook. Support this 20% growth. You know, you said your capex is largely, you know, maintenance and optimization. So, how are we placed in terms of in-house capacity across, you know, material, packaging, bottling, printing, stuff like that? You just highlight, do we have enough to support this, you know, give more color on this 20% growth? That's the first question.

Yeah, so the first question is regarding the 20% category, 20% growth on the P&A site. Yes, you are right that these are the brands which will take it. Like Magic Family is growing more than 22% as a whole and last quarter 28%. New flavors are adding a lot of strength to the Magic growth. Then after dark, which is a large segment, in large segment, it is an industry of 75 million cases plus. So that is also adding. Royal Rantambo, the another brand, which is also growing by more than 50%. And as a bouquet, as some of the brands are still in a very, very nascent stage and all that, we are confident to deliver 20% growth around as a category, full categories, as a P&A category. Second question is regarding the capacity. So, actually, out of 60-65% of our capacity is outsourced by lease arrangements, etc., across India. And 30-35% is being handled by us in our own plants. So, we believe in outsourcing that with the quality tie-up arrangements, etc. So, we are confident and the capex, as I said, will be in the range of 150 to 175 rows, which will be largely on my internal capacity expansion and optimization, etc. So, we will be doing that mix of that, but the capacity is not a constraint for the growth.

Go ahead, sir. And this entire 60-65% outsourced arrangements, from a supply chain perspective, they could face some hiccups in terms of whatever they are sourcing components and material from. Of course, gas is an issue and could have some supply hiccups. In terms of our discussions with them, this outlook in terms of 20% growth also accounts for all the supplies on time to the vendors as well.

As far as the tie-up unit goes, all the material is procured by Radicom. They are only converting it. So, all the raw material is our, our, this thing. So, we don't foresee any problem in that.

And just lastly, on employee cost, just as a direction, when I look at, you know, over the last four or five years, And this number actually has grown, you know, much lower than what top-line growth Radico has seen overall from a system level. Of course, we've been investing into, you know, people and we've been training, you know, people inside the company itself. But going forward, do you still think this 15% cost stagger for staff cost is, you know, is enough to sustain this 20-25% kind of P&A outlook over the next 2-2 years?

Yeah, our internal team is very strong, and second is, the operating leverage is coming into play, as the turnover is increasing, we do not require the same number of manpowers, so the operating leverage is kicking in, which is helping our margins also.

So it should continue the simpler way as of what we have seen so far, over the last 12 years. Okay, perfect. Thank you so much, and best wishes for the next year.

Thank you. The next question is from the line of Naveen Narithi from Narithi Investment Private Limited. Please go ahead.

Hello. Am I audible?

Yes, ma'am.

Congratulations, and thanks for the opportunity. So, my first question is, given rising health awareness, how are you adopting your portfolio like premium, ready-to-drink, low-alcohol to capture Gen Z consumers, and also diversifying the portfolio, which will reduce the dependence on Indian excise policy? That is my first question.

Hello.

As far as the Gen Z goes, you know, the white spirit is what the Gen Zs prefer, and that is where our innovation of the different flavors of vodka is coming into play, and that is helping us to get the Gen Z into the white spirit, what I told earlier. We see this white spirit expanding in a lot of states now. So I think that is a trend we are seeing with the Gen Zs. As far as the low alcoholic or RTD goes, as of now, we don't have any. Major plans to get into it.

Yeah, because these days, what I observe personally is Gen Z's focus is on, like, they are very careful about what they're drinking and they're limiting their, like, they don't drink too much also. They think and then they act. So, that was my concern, like, how are we thinking to modify our portfolio into non-alcoholic or low-alcoholic beverages so that we can benefit in future? That was my concern.

You are absolutely right. The Gen Z, what they are doing is, everyone is like... Health conscious, responsible drinking, etc. So they drink less, but they want to drink the finest. That is why you see the PMA category is going across India, and that is the main trend. Okay.

So, like, no future plans for getting into another, like, low-alcoholic drink. Like, many of your competitors are also entering into those segments, so you don't have any plan to enter those segments, right, in future.

No, we don't have any plans as of now.

Okay, and another question is like Rampur, Indian single Malita, and Jaisal Maher drafted, and magic moments. Like these are getting a lot of traction in global market like internationally also. So, like knowing that our share like international contribution So, top line is around 8 to 9% only. So, going forward, are we looking to penetrate even in a better way, the global market scenario? How are we strategizing that forward?

Yeah, the international market is a very important strategic market for us, and it's not only the international market, but even the global travel retail. That's very important. We are currently in 50-plus airports. And our target is to cross 100 airports in quick time. In terms of the share of international business in the overall, it's thanks to our domestic business, which is growing at a very, very fast pace. The share keeps coming down, so we're not complaining about it.

All right, all right. That was my question, and thank you, and I really like this. Like, this is the first time I'm attending the investor call, and you're really doing a great job, and all the best for the future. Thank you.

Thank you. The next question is from the line of Yash Patil from Dalal and Brocha. Please go ahead.

Hi, sir. Thank you for the opportunity. So, in 2023, you flagged the Maharashtra industry volume down around 20% for MML policies and said you will launch MML through your R&B joint venture in January. So, how has the R&B joint venture performed since launch and what is your current market share in Maharashtra? And do you see the market recovering toward the original 2.4 million cases per month in Maharashtra?

You see, as far as Maharashtra is considered, we have, you know, saliency of around 3 to 4% of our overall business. Yes, after the MML introduction, the industry, the IMF industry has gone down, you know, it has gone down by 20-25%. So gradually, MML is stabilizing. And we hope so that, you know, IMFL in the over a period of time should come back to the, you know, in the novel position. And since we are cutting vodka category and above there, so premium as a work is a stable for us.

Yeah, thank you, and all the way for that.

Thank you. The next question is from the line of Vinay Rawal from Choice International Equities. Please go ahead.

Yeah, thanks for the opportunity, sir. I had a couple of questions, but they are more or less answered. So, thank you so much.

Thank you. The next question is from the line of Dheeraj Mishri from Jefferies. Please go ahead.

Yeah, hi. Good afternoon, sir. Sir, can you spend some time on Karnataka policy? How do we read that? And what kind of price decline or hike we can expect across a range of products?

See, as we had said earlier, that Karnataka is a progressive, Karnataka is on the progressive march. So, as far as a price is considered, they have taken this step last year also, where they have rationalized the price of premium brands. And our brands like Rampur, Single Malt, Jaffel Mail, Craft Gin, Royal Ranthambur, Sangam, etc. has been benefited in the larger way, and other brands of the industry have also been benefited. It's a Cosmo market at the end of the day, so it has a lot of consumption. Now, in the second step also, government is also thinking on the similar lines. But at the same time, you know, seeing the policy is yet not out. So we cannot say that. But as far as market and other things are considered, we can say that they are thinking on that line and they have seen a success of, you know, premium and above category, you know, increase. The overall saliency of the premium and above category has been increased in the last decision of that. So definitely they will look forward for rationalizing these brands further.

Got it. Got it.

And, sir, what would be the margin for non-IMFL business in this for the full financial year? And how do we see the growth as well as margin profile of non-IMFL business going ahead?

The margin in the IMFL business is around 20% plus, 20-21% for full year, and non-IMFL it is in the range of 9%.

And how do we expect growth in non-IFL business?

Non-IFL business is growing at 7 to 8 percent, this thing, which is a natural growth of the industry. As far as the bulk spread is concerned, that will, in due course of time, start being consumed by us cautiously, so that will get reduced. So, proportion as of now also, the IMFL is constructing around 70-75% of the overall saliency of the top line. So, we'll see a gradual shift to IMFL from non-IMFL.

Okay. Okay. And so, last question is on CapEx, that now that we will become debt-free in FY27, and already you have announced that minimum 20% would be the dividend payout policy. How do we see the incremental capital allocation going ahead? Would we do further capex or would be looking for inorganic growth or acquisition? How do we see on capital allocation?

As far as the first step we have taken on this is to have a minimum payout of 20%. And in due course of time, with the time passes and the availability of cash generation and free cash flow available, it will be looked into. However, if there is an opportunity which gives us more than 20-25% ROC, we will be definitely looking at that. But the point is, we believe in an organic growth rather than an inorganic growth. So as far as the acquisition or anything is concerned, that is what at this point of time is being ruled out.

Okay, okay. Sorry, but I don't know whether this question was asked or not. So, in our assumption of 125 bps of margin expansion, do we take any benefit from UK-India FTA trade?

Yeah, it's inclusive of all because there will be some pluses and some minuses. We can't predict what kind of the global and geopolitical situation arise. So, taking into account all these things, I think we're confident to deliver a 125 basis point improvement.

Okay, so that includes UK India FTA trade benefit as well. Thank you, sir. Yeah, yeah.

Thank you. The next question is from the line of Karan Kamda from Choice International Equities. Please go ahead.

Hello, sir. Thank you for the opportunity, and congratulations on a really great set of numbers.

So, first question I had is, what kind of pricing power do we have across markets, at least our top markets, and if you can help me with what our top markets are in terms of salience, and when can we actually do the revisions? Are there any legal restrictions or not on pricing revisions? Secondly, I really appreciate the goal of reaching the 1000 crore mark and we are saying 25% to reach it in three years. What kind of brands are our high conviction brands and what kind of geographies are we betting on?

So your first question is regarding the pricing power.

So as you are aware that state excise policies, generally when the industry represents about the reason for seeking the price increases and all that, in the scenario the state government considers now as positively because their concern is also the revenue and all that. As we said that seven to eight states have already This is a continuous process, which the industry associations keep doing with the state government and some of the talks are still on and all that because of the cost was being faced by the industry. So that is, I can't say that which other states, but yes, it is an ongoing process. Regarding your second question regarding.

Sir, path to luxury market, what are we sort of betting on? What are our top brands that we are focusing on for turning 475 into 1000 crores? And I'm sure we'll show luxury as a subject line item as well when we reach there. So what are we betting on in terms of brands and geographies?

Our guidance, first of all, is for the next year, 25%, not for three years. So next year, our guidance is 25%. After that, we'll see. But we are very confident on our luxury portfolio because we are seeing growth coming from everywhere.

Okay. So nothing, no particular product or category that we are betting on?

No, no, like Rampur Indian single malt, the expressions of Rampur, the Virashat Indian single malt, the spirit of Kashmir, Jekyll May, Royal Vanthamwood, all these brands.

Okay, got it, sir. And, sir, if you can just list out what are top three states and what salience we have in those states, that would be very helpful.

So, the top three states are Uttar Pradesh, Andhra Pradesh, and Rajasthan, and we are actually pretty well spread out on our saliency, North, South, everywhere I think Redigo is growing, but these are the three big states.

Okay, thank you, sir, and all the best for the future.

Thank you. The next question is from the line of Nitin Awanshti from InCrate Research. Please go ahead.

Hello, sir. One, I would like to know, given that MML is right now established in Maharashtra and stabilizing, and you have a JV there, which is allowing you to participate within that industry, and you have already lined up some pretty eye-catching products. Given that, do you expect the JV in Maharashtra to take a substantial portion of this increasing market?

See, we are aiming about 10 to 15% of the MML category, and we just launched it a couple of months back, and the response to the brand is quite encouraging.

Yes, sir, that is definitely, they have seen the products within the range, and of course, there is no... The debate that your products stand out across the line, you know, in that category, and given that this distribution strength, you could obtain backing of the main company. The growth, of course, there is going to be substantially high if the entity stabilizes. Now, here, given that the growth is going to be coming from this segment, and that's the market you are aiming at, is there more investment going to be made in the JV? No. Okay, even for this market share graph that you are looking at?

Yeah, absolutely, because it's more of creating the brand and the distribution leverage, and the JV itself is throwing a lot of cash, so I think there is no requirement of any investment.

Understood. So, next question on the UP side, UP IML, we were always in top two, sometimes number one, number two, but financial year 26, have we ended it at number one position, number two position, officially?

We are number one.

Okay, currently we have moved to number one. Okay. And within the space of UPML, the UPML segment, the growth there and how much market are we aiming to capture there? First of all, is the segment itself as exciting as the state policy makes it to be? And other consumers also as excited about this segment?

I think our market share there is about close to 26, 25, 26 percent, and we are aiming at the normal growth, what the market will be having. We are not looking at an abnormal growth there.

Understood. And in particular on the UPML segment, the excitement is there as the state makes it to be?

It's a consolidated, we are talking about 24, 25 percent market share in UPML and UPCL. Understood sir, our objective and our focus area core business is on the MSU side which continues to grow in very very strong double digit 20% is our guidance and we continue to focus on that across markets.

Understood sir, thank you.

As there are no further questions from the participants, I now hand the conference over to the management for closing comments.

Yes, so the current environment reinforces the strength and resilience of Redivo Khaitan's business model, strong operating performance, margin expansion, and improved return ratio and healthy cash flow generation. Respect the quality of our growth and impact of the discipline execution. With a differentiated premium-led portfolio, a robust balance sheet, and continued focus on financial discipline, we are well positioned to navigate near-term uncertainties and sustain our profitable growth trajectory. We remain confident in road ahead and committed to creating long-term value for our stakeholders. Thanks for joining us today. I look forward to connecting with you next quarter. Thank you.

Thank you. On behalf of DAM Capital Advisor, that concludes this conference. Thank you for joining us. You may now disconnect your lines.