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Rallis India Ltd Research Report - 26th Jul 2016

Agrichemical | Published on Jul 26th 2016

IT

For 1QFY2017, Rallis India (Rallis) reported a yoy growth of 7.2% in sales to Rs445cr (V/s Rs415cr in 1QFY2016). On the operating front, the gross margin came in at 45.4% (V/s 44.8% in 1QFY2016), which along with sales growth aided the OPM to come in at 15.8% (V/s 13.5% in 1QFY2016). Aided by sales growth, a good operating performance and surge in other income (Rs7cr V/s Rs5cr in 1QFY2016), the Adj. Net profit grew 16.1% yoy to Rs49cr (V/s Rs42cr in 1QFY2016). We maintain our Neutral view on the stock. Robust numbers: For 1QFY2017, the company reported a yoy growth of 7.2% in sales to Rs445cr (V/s Rs415cr in 1QFY2016). On the operating front, the gross margin came in at 45.4% (V/s 44.8% in 1QFY2016), which along with sales growth aided the OPM to come in at 15.8% (V/s 13.5% in 1QFY2016). Aided by sales growth, a good operating performance and surge in other income (Rs7cr V/s Rs5cr in 1QFY2016), the Adj. Net profit grew 16.1% yoy to Rs49cr (V/s Rs42cr in 1QFY2016). The reported net profit came in at Rs174cr (V/s Rs42cr in 1QFY2016), benefitting from an exceptional income of Rs158cr related to profit on assignment of leasehold rights of a plot of land in MIDC area, Turbhe, Novi Mumbai. Outlook and valuation: For FY2016-18E, we expect a CAGR of 15.0% and 22.3% in net sales and profit, respectively, with recovery expected in FY2017. At the current levels, the stock is trading at a fair valuation of 19.8x its FY2018E EPS. Hence, we maintain our Neutral recommendation on the stock.

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CMP 218
Target Price
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)3,857.29
MCAP NSE (Rs in Cr)3,861.18
P/E (x)22.90
EPS (Rs.)8.66
BV (Rs.)54.42
Div Yield (%)1.26
FV (Rs.)1.00
P/BV (x)3.61
EV/Sales (x)2.44
EV/EBITDA (x)18.57

Shareholding Pattern (%)

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

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