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Rallis India Ltd Research Report - 21st Jan 2016

Agrichemical | Published on Jan 21st 2016

IT

Rallis India (Rallis) posted a disappointing set of numbers for 3QFY2016. Sales for the quarter came in at Rs306cr V/s Rs385cr in 3QFY2015, a dip of 20.4% yoy. Higher sales return in the domestic segment and cancellation of orders by clients in global markets, along with a dip in the seed business, led to the decline in the top-line. On the operating front, the gross margin came in at 48.2% V/s 46.8% in 3QFY2015; still the OPM declined to 10.2% V/s 12.0% in 3QFY2015. This was owing to lower sales during the quarter. The PAT came in at Rs20cr V/s `25cr in 3QFY2015, a dip of 19.9% yoy. We remain Neutral on the stock. Disappointing numbers for the quarter: Sales for the quarter came in at Rs306cr V/s Rs385cr in 3QFY2015, a dip of 20.4% yoy. Higher sales return in the domestic segment and cancellation of orders by clients in global markets, along with a dip in the seed business, led to the decline in the top-line. On the operating front, the gross margin came in at 48.2% V/s 46.8% in 3QFY2015; still the OPM declined to 10.2% V/s 12.0% in 3QFY2015. This was owing to lower sales during the quarter. The PAT came in at Rs20cr V/s Rs25cr in 3QFY2015, a dip of 19.9% yoy. The dip in PAT was lower than that in the EBDITA as tax outgo during the quarter was lower than in the corresponding quarter of last year. Outlook and valuation: Given the pressure on the financials, we expect Rallis to register an 8.9% dip in sales in FY2016. For FY2015-17E, we expect a CAGR of 3.7% and 3.4% in net sales and profit, respectively, with recovery expected in FY2017E. At the current levels, the stock is trading at a fair valuation of 17.3x its FY2017E EPS. Hence, we maintain our Neutral recommendation on the stock.

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CMP 150
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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