Hold Rallis India; target of Rs 140: KRChoksey

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Hold Rallis India; target of Rs 140: KRChoksey

KRChoksey has recommended hold rating on Rallis India with a target of Rs 140, in its January 24, 2012 research report.

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KRChoksey has recommended hold rating on Rallis India with a target of Rs 140, in its January 24, 2012 research report.

"Rallis India reported healthy topline growth of 18.6% y-o-y to Rs 317.9 crores, largely driven by 13% y-o-y growth in the standalone core business. Core business (standalone) sales grew 13% y-o-y to Rs 302.8 crores, largely volume growth, impacted by erratic rainfall & low pest occurrence. EBITDA margins declined by 55 bps y-o-y on account of high raw material costs as a % to sales, resulting in lower EBITDA growth of 10.9% y-o-y. Consolidated PAT stood at Rs 7.7 crores, impacted by forex loss of Rs 8.2 crores and exceptional item of Rs24.2 crores(Cessation of turbhe plant) Metahelix reported sales of Rs 15 crores & Operational loss of Rs -2 crore on account of erratic NE rainfall & cancelled export order."

"Rallis India's core business saw moderation in growth with net sales up by 13% y-o-y to Rs 302.8 crores. Exports continued to remain robust in Q3 however the core business was impacted due to lower consumption of agrochemicals on the back of unseasonal and deficient rainfall. The 3 key states where majority of agrochemical sales happen in Q3 (Maharashtra, Karnataka, AP (75% deficient rain)) saw unfavourable climatic conditions impacting the sowing. This coupled with lower acreages in pulses & oilseeds and disease free crops (potato, paddy) resulted in moderation of usage of crop protection chemicals. Consolidated margins declined 196 bps y-o-y on account of higher other expenses. As a result EBITDA grew at a lower rate of 7.5% y-o-y to Rs 55.3 crores. Company reported a Net profit of 7.7 crores, impacted by exceptional items of Rs 35 crores (Forex loss -Rs 8.2 cr & cessation cost of Rs 24 crore) and higher depreciation, higher interest cost (increased working capital due to dahej ramp up)."

"We believe the near term profitability to remain under pressure on account of unfavourable climatic conditions, low pest occurrence & low farmer profitability. Consequently we have revised our estimates downwards to factor in low domestic volume growth. However we do remain positive on Rallis India's capability to leverage on its superior product portfolio, strong marketing & distribution channel to tap opportunities in difficult times. Thus we recommend a 'HOLD' on the stock with a price target of Rs 140, giving an upside potential of 12%," says KRChoksey research report.  

FIIs holding more than 30% in Indian cos

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