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Rallis India Ltd Research Report - 22nd Jan 2016

Agrichemical | Published on Nov 04th 2015

IT

Rallis India (Rallis) posted disappointing results for 2QFY2016. Sales for the quarter came in at Rs499.7cr V/s Rs635.9cr in 2QFY2015, a dip of 21.4% yoy. Sales were adversely impacted due to poor monsoon in India, while the international market also faced pressure with Brazil (a key market for the company) witnessing a severe drought. In USA, low crop commodity prices along with higher inventory prices impacted consumption. On the operating front, the gross margins came in at 46.7% V/s 38.5% in 2QFY2015, which lead the OPM to come in at 18.9% V/s 18.2% in 2QFY2015. The PAT came in at Rs57cr V/s Rs73cr in 2QFY2015, a yoy dip of 22.0%. We remain Neutral on the stock. Disappointing sales: For 2QFY2016, sales came in at Rs499.7cr V/s Rs635.9cr in in 2QFY2015, a dip of 21.4% yoy. Sales were adversely impacted due to poor monsoon in India, while the international market also faced pressure with Brazil (a key market for the company) witnessing a severe drought. In USA, low crop commodity prices along with higher inventory prices impacted consumption. On the operating front, the gross margins came in at 46.7% V/s 38.5% in 2QFY2015, which lead the OPM to come in at 18.9% V/s 18.2% in 2QFY2015. The PAT came in at Rs57cr V/s `73cr in 2QFY2015, a yoy dip of 22.0%. Outlook and valuation: The Management is confident about the long-term prospects of the agrochemicals industry. We expect Rallis to register a CAGR of 15.1% and 16.7% in net sales and profit, respectively, over FY2015-17E. At the current levels, the stock is trading at a fair valuation of 18.7x its FY2017E EPS. Hence, we maintain our Neutral recommendation on the stock.

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CMP 206
Target Price
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)3,917.58
MCAP NSE (Rs in Cr)3,932.16
P/E (x)23.26
EPS (Rs.)8.66
BV (Rs.)54.42
Div Yield (%)1.24
FV (Rs.)1.00
P/BV (x)3.66
EV/Sales (x)2.48
EV/EBITDA (x)18.91

Shareholding Pattern (%)

Promoter50.0
Public & Others25.0
Institution12.0
Corporate7.0
Foreign6.0
Grand Total100.0

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