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Rallis India Ltd Research Report - 29th Apr 2016

Agrichemical | Published on Apr 29th 2016

IT

For 4QFY2016, Rallis India (Rallis) posted sales of Rs342cr V/s Rs315cr in 4QFY2015, a growth of 8.6% yoy. The same was driven by higher offtake in export orders which have been getting differed since the past two quarters due to a challenging environment faced by global companies. Domestic growth continued to remain muted during the quarter. On the operating front, the gross margin came in at 43.3% V/s 47.0% in 3QFY2015, leading the OPM for the quarter to decline to 10.4% V/s 12.3% in 3QFY2015. In spite of the same, the PAT came in at Rs32cr V/s Rs21cr in 3QFY2015, a growth of 51.3% yoy. This was on back of the depreciation dipping by 55.4% yoy and a 132.1% yoy growth in other income (which came in at Rs15cr V/s Rs6cr in 4QFY2015). We remain Neutral on the stock. Margins disappoint: Company posted a robust growth in the top-line of 8.6% yoy to Rs342cr, mainly driven by exports. On the operating front, the gross margin for the quarter came in at 43.3% V/s 47.0% in 4QFY2015, while the OPM came in at 10.4% V/s 12.3% in 4QFY2015. The PAT came in at Rs32cr V/s Rs21cr in 4QFY2015, posting a growth of 51.3% yoy which is in spite of a contraction in the OPM. The PAT was aided by a 55.4% yoy dip in depreciation and 132.1% yoy growth in other income (which came in at Rs15cr V/s Rs6cr in 4QFY2015). 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 FY2017E. At the current levels, the stock is trading at a fair valuation of 17.9x its FY2018E EPS. Hence, we maintain our Neutral recommendation on the stock.

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CMP 196
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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