Radico Khaitan Shares Jump on Commissioning of New Distillery
Radico Khaitan’s share price rose by 1% on September 18, 2023, after the company announced the commissioning of a new greenfield grain distillery in Sitapur, Uttar Pradesh. The distillery has a capacity of 350 kilo-liters per day and is expected to be fully operational within 2-3 weeks. The company also installed a captive power plant of 15 MW and a malt maturation facility with a capacity of 10,000 barrels at the site.
The new distillery will help to secure Radico Khaitan’s extra-neutral alcohol (ENA) supplies and support the growth of its branded business for the next 7-10 years. The company expects to realize the full financial benefit of the new facility from Q3 FY24.
Radico Khaitan is the largest manufacturer of Indian Made Foreign Liquor (IMFL) in India with a production capacity of 165 million liters per annum. Its stock is currently trading at a trailing PE of 79.30x, making it the second most expensive stock among alcohol-making peers.
Analysis
The commissioning of the new distillery is a positive development for Radico Khaitan. It will help to secure the company’s ENA supplies and support the growth of its branded business. The new facility is also expected to boost the company’s profitability.
However, it is important to note that Radico Khaitan’s stock is currently trading at a premium valuation. Investors should carefully consider the company’s fundamentals and investment outlook before making any investment decisions.
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