Rallis India - 1QFY2016 Result Update - Angel Broking

Rallis India (Rallis) posted a disappointing set of numbers for 1QFY2016. On the top-line front, it reported a de-growth of 0.4% yoy to Rs. 464cr. Sales were impacted by weak demand. On the operating front, the company reported an EBITDA margin of 11.2% V/s 12.1% in 1QFY2015, a contraction of 94bp yoy. This was inspite of the gross margin expanding by 214bp yoy for the quarter to 52.5%. Thus, lower sales are the main culprit impacting EBDITA margins. The PBT before extraordinary items posted a de-growth of 13.4% yoy owing to a 66.3% yoy rise in interest cost. The Adj. net profit declined by 10.5% yoy to ~Rs. 33cr. We remain Neutral on the stock.

Disappointing sales: On the top-line front, Rallis reported a de-growth of 0.4% yoy to Rs. 464cr. Sales were impacted by weak demand. On the operating front, the company reported an EBITDA margin of 11.2% V/s 12.1% in 1QFY2015, a contraction of 94bp yoy. This was inspite of the gross margin expanding by 214bp yoy for the quarter to 52.5%. The PBT posted a de-growth of 13.4% yoy owing to a 66.3% rise in interest cost. The Adj. net profit declined by 10.5% yoy to ~Rs. 33cr.

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 20.3x FY2017E EPS. Hence, we maintain our Neutral recommendation on the stock.

Shares of RALLIS INDIA LTD. was last trading in BSE at Rs.223 as compared to the previous close of Rs. 223.3. The total number of shares traded during the day was 66957 in over 1258 trades.

The stock hit an intraday high of Rs. 228.9 and intraday low of 222. The net turnover during the day was Rs. 15111407.

Source : Equity Bulls

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