Angel Broking neutral on Rallis India

“For 4QFY2012, Rallis India (RAIL) reported a disappointing set of numbers. Lower sales during the quarter impacted the company’s overall performance. The company’s consolidated net sales dipped by 13.7% yoy to Rs206cr. OPM for the quarter dipped to ~1%, the lowest in the recent past for the company. This dip in OPM resulted in a 70.7% yoy decline in the company’s adjusted net profit to Rs6cr. Going forward, we expect RAIL to register a CAGR of 15.0% and 18.9% in its net sales and profit over FY2012-14, respectively. We remain Neutral on the stock.”

“RAIL’s revenue for the quarter declined by 13.7% yoy to Rs206cr. The dip in sales growth came on the back of sluggish domestic growth, which forms a major part of the company’s sales mix. On the operating front, gross margin came in at 39.1%, down 155bp yoy. However, there was a sharp dip in OPM, which declined to 1.0% in 4QFY2012 vs. 10.0% in 4QFY2011. This resulted in a sharp dip of 70.7% yoy in adjusted net profit to Rs6cr .”

“Management is confident about the long prospects for the agrochemicals industry. We expect RAIL to register a CAGR of 15.0% and 18.9% in its net sales and profit over FY2012-14, respectively. At current levels, the stock is trading at fair valuations of 15.2x FY2014E EPS. Hence, we maintain our Neutral recommendation on the stock,” says Angel Broking research report.

Public holding more than 90% in Indian cos   

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