> ## Content Index > Fetch the complete content index at: https://www.moatmarginresearch.com/llms.txt > Use this file to discover other available public pages before exploring further. # Radico Khaitan's 20% Margin and the Product Mix - URL: https://www.moatmarginresearch.com/radico-khaitan-q2-premium-mix-margin/ - Published: 2026-10-28T02:50:26.000Z - Updated: 2026-10-28T02:50:26.000Z - Description: Radico Khaitan's EBITDA margin rose to 20.4% from 15.8% while Prestige & Above volume grew 35.8% and Regular & Others fell. What the filings show. - Author: A K Karthikeyan - Tags: Moat Insights **Radico Khaitan reported what it calls its highest-ever quarterly volume for the September quarter. The more telling split is inside it: volume of its Prestige & Above brands rose 35.8% to 5.28 million cases, while Regular & Others fell 9.7% to 4.55 million. Gross margin rose to 48.0% from 43.6%, and EBITDA margin to 20.4% from 15.8%. On our arithmetic from the filings, a case inside each segment brought in about 2% or less more net revenue than a year ago. The average case brought in more because more of the cases were the dearer kind.** All figures are standalone, for the quarter ended 30 September 2026 (Q2 FY27) against the year-ago quarter, unless stated otherwise. The auditors' limited review conclusion is unmodified (\[A\]). ## The idea in one sentence At a spirits maker, the margin is set less by how many bottles leave the plant than by which bottles they are, and Radico's quarter is a clean example of it (our reading; the arithmetic follows). ## The fact that breaks the assumption "Record volume" is the easy headline, and the company's highlights slide does say "Highest ever volume, top line and profitability" (\[B\], p. 4). But look at what grew and what shrank (\[B\], p. 10): | | Q2 FY26 | Q2 FY27 | Change | | ------------------------------ | ------------------ | ------------------ | ------ | | Prestige & Above volume | 3.89 million cases | 5.28 million cases | +35.8% | | Regular & Others volume | 5.04 million cases | 4.55 million cases | \-9.7% | | Total own volume | 8.93 million cases | 9.83 million cases | +10.1% | | Net revenue | ₹1,493.9 crore | ₹1,745.1 crore | +16.8% | | Gross profit (company measure) | ₹652.0 crore | ₹838.4 crore | +28.6% | | EBITDA (company measure) | ₹236.1 crore | ₹356.5 crore | +51.0% | | Net profit | ₹139.0 crore | ₹230.9 crore | +66.1% | Net revenue of Regular & Others fell 9.3% to ₹292.7 crore, while Prestige & Above net revenue rose 38.6% to ₹996.0 crore (\[B\], p. 10). Prestige & Above was 53.7% of own volume, against 43.6% a year ago, and 77.1% of IMFL revenue (the company's term), against 68.6% (\[B\], p. 10). So what the company calls its best quarter came with its cheaper segment shrinking in both volume and net revenue. ## One case, followed Take one case from each segment. Dividing the segment's net revenue by its volume (\[B\], p. 10; our arithmetic, approximate because volumes are rounded): - A Prestige & Above case: about ₹1,886 of net revenue, against about ₹1,847 a year ago (+2.1%). - A Regular & Others case: about ₹643, against about ₹640 (+0.4%). A Prestige & Above case brings in roughly three times the net revenue of a Regular case. Across the two segments together, net revenue per own case rose about 12.4%, to about ₹1,311 from about ₹1,166 (our arithmetic). Had Q2 FY27 volumes sold at last year's per-case figures, the two segments would have brought in about ₹1,266.5 crore, against ₹1,288.7 crore reported. So about ₹22 crore of the ₹247.5 crore rise is a per-case effect; the rest is more cases and a richer blend (our arithmetic). The filings do not make this split. The company says "Premium volume growth was led by a 49% growth in the vodka portfolio which reached 2.96 million cases" (\[B\], p. 13). ## The mechanism: the margin is made at the gross-profit line The company's slide says "A richer mix and operating leverage have lifted EBITDA margin to around 20%" (\[B\], p. 18). The numbers say most of the lift came before operating costs. Gross margin rose 440 basis points; EBITDA margin rose 462 basis points, as the company reports it (\[B\], p. 4). Costs between gross profit and EBITDA were 27.6% of net revenue, against 27.8% a year ago (our arithmetic from \[B\], pp. 11-12). So 440 of the 462 basis points sit in the gross-margin line, and the lower cost ratio below it accounts for about 22 (our arithmetic). The company calls that operating leverage; about 17 of the 22 come from the employee, selling and other-expense lines, and the rest from the small unexplained gap between the company's EBITDA and those lines (see NOTE). That fits a mix explanation, but the filings stop short of proving it: the company also credits operating leverage and the grain stock it built ahead, and IMFL was 74.0% of net revenue against 70.1% a year ago (\[B\], p. 10), so the blend moved between IMFL and non-IMFL as well. The company reports gross margin only for the whole business, in one segment (\[A\], note 3), so we cannot see that a Prestige & Above case earns a higher margin than a Regular case. Our reading is that it does, and that this is why the blend matters; the company's own words are that "Premiumization has led to higher profitability and stronger return ratios" (\[B\], p. 7). Selling and distribution expenses rose 19.5% to ₹184.3 crore (\[B\], p. 12), and A&SP spend was 6.6% of IMFL sales against 6.1% (\[B\], p. 13). Our reading is that the brand is the moat here and that it shows up in the mix. Our first-pass note on Radico names Intangible Assets as its primary edge: MoatSCORE (provisional, first-pass) 5.60 on our [Moat Screener](https://www.moatmarginresearch.com/moat-screener/) (\[G\]), with the reasoning on the [Radico Khaitan moat page](https://www.moatmarginresearch.com/radico-khaitan-moat/) (\[F\]). The per-case figures add a qualification: in this quarter the brands did not bring in visibly more per case; more of the dearer ones were sold (our arithmetic). In September we wrote about another liquor maker, Som Distilleries, where the asset was a licence rather than a brand (\[E\]). ## The stock bought ahead, and the working capital The presentation gives one line on costs: "To mitigate the impact of increasing grain prices to a large extent, we had built up higher level of stocks which has supported us through Q2 FY27\. This has resulted into higher working capital during the quarter" (\[B\], p. 13). What the balance sheet shows at 30 September 2026 against 31 March 2026 (\[A\], p. 5; our arithmetic from ₹ lakh): - Inventories (all inventories, not only grain): ₹1,260.6 crore, up ₹95.0 crore from ₹1,165.6 crore. - Trade receivables: ₹1,516.9 crore, up ₹327.3 crore (about 27.5%) from ₹1,189.6 crore. - Inventories plus receivables less trade payables and acceptances (a construct of ours, not a company measure): ₹2,074.4 crore, up ₹345.3 crore from ₹1,729.1 crore. In the half-year cash-flow statement (\[A\], p. 6), inventories absorbed ₹99.9 crore against ₹8.2 crore in H1 FY26, and trade receivables ₹336.5 crore against ₹117.1 crore. Cash flow from operating activities before working-capital changes rose by ₹248.9 crore (to ₹723.6 crore from ₹474.6 crore), while cash generated from operations before tax rose by ₹53.2 crore (to ₹508.2 crore from ₹455.0 crore). Net cash from operating activities was ₹378.3 crore against ₹384.2 crore. The company does not tie the receivables increase to anything in the documents we read. Net debt still fell to ₹175.4 crore, which is ₹68.7 crore below March, and the slide adds "Net Debt free during H2 FY2027" (\[B\], p. 13). That last phrase is the company's expectation, not a result. ## Two other filings the same day **The DRI visit.** In a separate Regulation 30 filing, the company says officials of the Directorate of Revenue Intelligence "visited" its corporate office in New Delhi and its registered office, which is also its manufacturing facility, at Rampur, Uttar Pradesh, on 26 October 2026 under the Customs Act, 1962, the last of the visits ending at 8:00 P.M. It says it "understands that the visit form part of an industry-wide exercise being conducted by the Revenue Authority," that "There is no impact on financial, operation or other activities of the Company as of now," and that it has extended "full co-operation" (\[D\]). The disclosure puts "Not applicable" against the violations row. The filing does not say what the officials examined or why. The results and presentation, filed hours earlier, do not mention it. **The CFO on the board.** The board approved Dilip Kumar Banthiya, the Chief Financial Officer, as an Additional Director in the category of Whole-time Director, designated "Executive Director and Chief Financial Officer", for three years from 28 October 2026, "subject to the approval of the Shareholders". It also designated Saket Somani, Senior Vice President, Finance & Strategy, as Deputy Chief Financial Officer from the same date (\[C\], Annexure A). That is approved by the board, not yet by shareholders. The press release says bringing the CFO onto the board "adds his deep financial, capital allocation and alcobev industry experience", and describes Mr Somani's earlier role as overseeing "financial planning and control, working capital, and the evaluation of capital projects" (\[C\], Annexure A). The filings do not connect the two events, or either to the working-capital rise. ## Where this breaks **One quarter is one quarter.** The 440 basis points are a year-on-year figure, against a base of 43.6%. Against the previous quarter (Q1 FY27), Prestige & Above volume rose 1.2%, gross margin slipped to 48.0% from 49.1%, and EBITDA margin to 20.4% from 20.7% (\[B\], p. 10-11). On the sequential numbers, this quarter held the level and gave a little back. **The grain buffer is finite, and the filings give no size.** The company says the stock it built "supported us through Q2 FY27". Our reading is that a stock bought ahead protects a quarter only for as long as it lasts. The filings give neither the grain price nor the stock level. The company reiterates "EBITDA margin guidance of around 20% for FY27" (Abhishek Khaitan, Managing Director, \[B\], p. 9), and the half-year margin is 20.5% (\[B\], p. 11). Our reading: guidance that matches the half-year run-rate is not independent evidence about the rest of the year. **The mix cuts both ways, and policy sits under it.** The company attributes the fall in Regular volume to "a higher base of Q2 FY26 after the change in the route-to-market in the state of Andhra Pradesh, and the impact of the policy change in Maharashtra and Karnataka" (\[B\], p. 13). Dr. Lalit Khaitan, Chairman and Managing Director, says the "rationalised duty framework" in Karnataka is "showing early signs of a healthier, more premium-friendly market" (\[B\], p. 8). Karnataka appears on both sides of the story. Whether the mix keeps improving depends partly on decisions the company does not make. Half-year Regular & Others volume is down 12.5% (\[B\], p. 10), so the shrinking base is not only a Q2 base effect. **Cash conversion lagged profit.** Cash flow before working-capital changes rose ₹248.9 crore in the half-year, but cash generated from operations before tax rose ₹53.2 crore. Receivables rose about 27.5% since March, while half-year net revenue was 14.3% above last year's (\[B\], p. 10). The two comparisons use different bases, and the filings give no 30 September 2025 balance sheet. Part of it could be timing; the documents do not say. **The DRI visit is open.** The company's impact statement is "as of now". "Industry-wide" is the company's understanding; we did not look for other companies' disclosures and cannot confirm it. **Limits of the sample.** One quarter, unaudited; standalone figures; the per-case and mix figures are our arithmetic on rounded volumes; we have not read the earnings call. ## Why it costs the reader something If you read this result as a volume story, you will watch the wrong line. Total volume including royalty brands rose 7.2%, to 10.02 million cases (\[B\], p. 4); the line that, in our reading, moved the margin was the share of the dearer segment in the blend. A reader who takes "highest ever volume" at face value will not see that a segment of about 4.55 million cases a quarter is shrinking, or that the profit rise came alongside roughly ₹345 crore more money tied up in stock and customers' dues in six months, on our construct. Our reading: margin from mix is only as durable as the brands and the state rules behind it. The lines to track in the next filings are the Prestige & Above share of volume, gross margin, inventories and receivables, not the headline volume. ## The case we followed Return to the two cases. A Prestige & Above case brought in roughly ₹1,886 of net revenue against ₹643 for a Regular one; each brought in within about 2% of its year-ago figure. In Q2 FY27 the company sold 5.28 million of the first kind and 4.55 million of the second, where a year earlier it sold 3.89 million and 5.04 million. Our reading: a 20.4% EBITDA margin, as the company reports it, is what that change in the blend looks like in the accounts. Alongside it sit more money in stock and receivables and a DRI visit whose scope the company has not described. ## Sources - **\[A\]** [Radico Khaitan, Q2 FY27 board outcome, results and limited review reports](https://nsearchives.nseindia.com/corporate/RADICO%5F27102026140827%5FRESULTS.pdf) (NSE) - **\[B\]** [Radico Khaitan, Q2 FY2027 earnings presentation](https://nsearchives.nseindia.com/corporate/RADICO%5F27102026141555%5FEarningpresentation.pdf) (NSE) - **\[C\]** [Radico Khaitan, Executive Director and CFO appointment, Deputy CFO, press release](https://nsearchives.nseindia.com/corporate/RADICO%5F27102026142525%5Fchangeinmanegment.pdf) (NSE) - **\[D\]** [Radico Khaitan, Regulation 30 disclosure on the DRI visit](https://nsearchives.nseindia.com/corporate/RADICO%5F27102026184728%5FDisclosureunderReg30.pdf) (NSE) - **\[E\]** [Moat & Margin, Som Distilleries and the Bhopal licence](https://www.moatmarginresearch.com/som-distilleries-bhopal-licence/) - **\[F\]** [Moat & Margin, Radico Khaitan moat page](https://www.moatmarginresearch.com/radico-khaitan-moat/) - **\[G\]** [Moat & Margin, Moat Screener](https://www.moatmarginresearch.com/moat-screener/) and [How MoatSCORE works](https://www.moatmarginresearch.com/moatscore/) --- > Educational research, not investment advice. Every figure above is drawn from Radico Khaitan's own filings, read from the primary documents on 28 October 2026; derived figures are our arithmetic, labelled as such. MoatSCORE read live from the Moat Screener on 28 October 2026\. No buy/sell recommendations, no price targets, no share prices. Moat & Margin is not a SEBI-registered Research Analyst or Investment Adviser.