ICICI Direct's research report on Rallis India
Rallis reported revenue growth of 6.9% YoY to Rs 570.5 crore against our estimates of Rs 579.8 crore. The growth was largely led by seed and domestic formulation business, which was up by 37% YoY & 17% YoY to Rs 41 crore & Rs 318 crore respectively. On the other side, international business revenue remained subdued primarily on account of poor realisations from metribuzin and lower offtake of PEKK under CRAMS, however strong volume growth of other key molecules arrested decline to a certain extent. Adjusting Rs 6 crore impact towards substandard stocks in the seed business, adjusted OPM for the quarter remained at 11.6%(+107bps YoY) against our estimates of 10.5%, leading to EBITDA growth of 18% YoY to Rs 66 crore against our estimates of Rs 60.9 crore. Adjusting the exceptional item to the tune of Rs 6.1 crore related to profit on sale of flats, PAT was up by 19.4% YoY to Rs 45.6 crore against our estimates of Rs 37.7 crore.
We value the company at 22x PER of FY23E. We arrive at a target price of Rs 350. We have a BUY recommendation on the stock.