Rallis India stock slips as HSBC issues reduce rating due to industry headwinds

Elara Capital remains optimistic on Rallis India stock with a target price of Rs 380, highlighting potential growth if new management meets expectations.

Rallis India shares fell on September 3 as HSBC issued a "Reduce" call on the stock with a target price of Rs 251 per share. The bearish call on the chemical, crop care & seed company's stock is due to industry headwinds that could impact its performance.

Rallis India is focused on adjusting its business model to leverage its strengths and execute a well-planned strategy to enhance its competitive position, HSBC noted.

The company aims to double its share in the domestic crop protection (CP) market and plans to focus on increasing revenue over the next 4-5 years. However, it is becoming more selective regarding its export activities, the brokerage said.

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Elara Capital, however, has a more optimistic view of Rallis India, acknowledging the company's history of promising turnarounds that have sometimes fallen short despite strong intentions. Monitoring the execution of current guidance and its impact will be crucial, the brokerage said.

If the new management delivers on its promises, a significant stock price re-rating is expected. Elara forecasts a compound annual growth rate (CAGR) of 12.5 percent for the topline, 24 percent for EBITDA, and 34 percent for profit after tax (PAT) through FY24-26. The firm maintains an "Accumulate" rating with a target price of Rs 380, based on a 28x FY26E EPS of Rs 13.7.

At 9:39 am, Rallis India shares were in the red at Rs 341.75 on the National Stock Exchange (NSE), down 1.6 percent from the previous close. The stock has gained nearly 36 percent so far this year. In the past 12 months, the stock has rallied 46 percent. In comparison, benchmark Nifty rallied 30 percent during this period.

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