Buy Rallis India; target Rs 197: Emkay

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Buy Rallis India; target Rs 197: Emkay

Emkay Global Financial Services is bullish on Rallis India and has recommended buy rating on the stock with a target price of Rs 197 in its October 21, 2011 research report.

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RELATED NEWS Hold MindTree; target of Rs 453: PINC Research Buy Infosys; target of Rs 3360: Sushil Finance Accumulate SIB; target of Rs 24: Angel Broking ALSO READ See previous views by Emkay Global Financial Services See what other Experts & Brokerages are saying about Rallis India See messages about Rallis India Rallis India BSE | NSE 31/05/12 Are Mutual Funds betting on Rallis India?

Emkay Global Financial Services is bullish on Rallis India and has recommended buy rating on the stock with a target price of Rs 197 in its October 21, 2011 research report.

"Rallis India, Q2FY12 PAT at Rs 585mn (flat yoy) were below est due to operating losses at Metahelix and lower standalone margins. Cons revenues grew by 19% yoy to Rs 4.39 bn with EBITDA margins of 22.2% vs 24% previous year. Lower pest occurrence and delayed sowing affected revenue growth. Thrust on revenue growth and aggressive products launch to put pressure on working capital resulting in higher interest. Downgrade EPS estimates to Rs 8/10.9 (previous Rs 8.9/11.6) for FY12/13."

"Rallis India reported consolidated revenues of Rs 4.39bn, +19% yoy, marginally lower than our est of Rs 4.7bn. This was primarily on account of lower than expected revenue contribution of Metahelix, the seed business and slower ramp-up in Dahej. Metahelix reported revenues of Rs 31mn against est of Rs 100mn. Standalone revenues grew by 19% yoy to Rs 4.36bn, aided by higher volumes. Rallis reported consolidated EBITDA of Rs 975mn, +10%yoy, lower than our est of Rs 1.13bn. EBITDA margins during the quarter declined by 182bps yoy to 22.2% against est of 24.0%. Margin disappointment during the quarter was led by operating losses reported by Metahelix. Metahelix reported revenues of Rs 31 mn however it posted EBITDA losses of Rs 35mn. On a standalone basis, EBITDA increased by 14% yoy to Rs 1bn against est of Rs 1.1bn. Standalone EBITDA margins declined by 90bps yoy to 23.1% (against est of 24.7%). Rallis reported consol APAT of Rs 585mn, flat yoy and AEPS of Rs 3.0."

"On back of weak results in current quarter due to operating losses at Metahelix and lower margins in standalone business along with deterioration in working capital, we have downgraded our FY12/FY13 estimates to Rs 8/10.9 (previous Rs 8.9/11.6) and subsequently reduced our price target by 6% to Rs 197. However despite short term pressure, we continue to maintain our BUY recommendation on the stock," says Emkay Global Financial Services research report.

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