Rallis reported revenue growth of 6.9% YoY to Rs. 570.5 crore against our estimates of Rs. 579.8 crore. The growth was largely led by seed and domestic formulation business, which was up by 37% YoY & 17% YoY to Rs. 41 crore & Rs. 318 crore respectively. On the other side, international business revenue remained subdued primarily on account of poor realisations from metribuzin and lower offtake of PEKK under CRAMS, however strong volume growth of other key molecules arrested decline to a certain extent. Adjusting Rs. 6 crore impact towards substandard stocks in the seed business, adjusted OPM for the quarter remained at 11.6%(+107bps YoY) against our estimates of 10.5%, leading to EBITDA growth of 18% YoY to Rs. 66 crore against our estimates of Rs. 60.9 crore. Adjusting the exceptional item to the tune of Rs. 6.1 crore related to profit on sale of flats, PAT was up by 19.4% YoY to Rs. 45.6 crore against our estimates of Rs. 37.7 crore.
Valuation & Outlook
We believe since outlined organic expansion are already underway with clear focus on maintaining/improving IRR profile of the business, it is evident that group operational performance should likely to improve in medium to long run. Further, control on the working capital and better allocation of incremental cash would aid return ratios further and thereby can command better valuations. We introduce FY23E estimates and roll over our valuations on FY23E. We value the company at 22x PER of FY23E. We arrive at a target price of Rs. 350. We have a BUY recommendation on the stock.
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_RallisIndia_Q3FY21.pdf
Shares of RALLIS INDIA LTD. was last trading in BSE at Rs.289.4 as compared to the previous close of Rs. 285.2. The total number of shares traded during the day was 23786 in over 689 trades.
The stock hit an intraday high of Rs. 294.4 and intraday low of 285.5. The net turnover during the day was Rs. 6924518. |
