Rallis India - Q1FY21 Result Update - ICICI Securities

Rallis reported topline growth of 6% YoY to Rs. 663 crore vs. our expectation of Rs. 725 crore. The lower growth was primarily due to poor sales from seed and international business. Revenue from the seed business grew 2.8% YoY to Rs. 261 crore while the same from crop protection was up 10.7% YoY to Rs. 402 crore. Higher gross margins (up 230bps YoY) due to increase in the realisation and change in the product mix translated into expansion in operational performance. OPM improved 415 bps YoY to 19.4% resulting in EBITDA growth of 35.4% YoY to Rs. 128 crore vs. our expectation of Rs. 110 crore. OPM from crop protection business expanded 596 bps YoY to 11.2%, while the same from seed business improved 228bps YoY to 31.4%. Better operational performance, higher other income (up 47% YoY) and lower taxes (23.5% vs. 30.7% in Q1FY20) led to bottomline growth of 52.6% YoY to Rs. 91.9 crore vs. our expectation of Rs. 80 crore.

Valuation & Outlook

Going ahead, increase in the CRAMS portfolio along with any progress towards inching up gross margins through change in the product mix or increasing backward integration is likely to lead to a new trajectory for the stock, going forward. We value the company at 20x PER of FY22E. We arrive at a target price of Rs. 310. We have a HOLD recommendation on the stock.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_RallisIndia_Q1FY21.pdf

Shares of RALLIS INDIA LTD. was last trading in BSE at Rs.302.35 as compared to the previous close of Rs. 306. The total number of shares traded during the day was 296855 in over 10015 trades.

The stock hit an intraday high of Rs. 324.6 and intraday low of 295.1. The net turnover during the day was Rs. 92694998.

Source : Equity Bulls

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