Prabhudas Lilladher's research report on Rallis India
We trim our FY23/24E EPS estimates by 16%/15% citing pressure on near term margins and upgrade the rating to ‘BUY’ from HOLD with revised TP of Rs230 (Rs260 earlier) based on 18xFY24 EPS. Management stated that recent correction in RM prices coupled with high cost inventory will exert pressures on 1HFY23 margins. However, 4-5% price hikes (as compared to Mar-22 levels) will help to partially mitigate the same. Rallis India (RALI) in its first ever pre-quarterly conference call highlighted that (a) domestic crop care and seeds segment will likely post stable performance in 1QFY23, placements have progressed as per plan and liquidation will take place in subsequent quarters; (b) delayed monsoons do have an impact in terms of placements and liquidation, while some crop shift patterns are visible in cotton and paddy crops; (c) exports will likely grow better than other segments (lower base of last year -8% YoY to aid growth); (d) pressure on margins likely to persist in near term, however, remains confident to maintain absolute EBITDA; (e) price hikes taken to the tune of 4-5% as compared to March’22 levels to mitigate inflated RM cost; and (f) capex plans are on schedule.
We expect revenue/PAT CAGR of 10%/4% over FY22-24E (vs 8%/3% over FY11-22). Upgrade to ‘BUY’ given recent correction in stock price (down >30%).
At 10:49 hrs Rallis India was quoting at Rs 189.85, up Rs 2.90, or 1.55 percent.
It has touched an intraday high of Rs 193.55 and an intraday low of Rs 186.40.
It was trading with volumes of 24,881 shares, compared to its thirty day average of 25,872 shares, a decrease of -3.83 percent.
In the previous trading session, the share closed down 0.93 percent or Rs 1.75 at Rs 186.95.
The share touched its 52-week high Rs 341.65 and 52-week low Rs 182.55 on 16 July, 2021 and 20 June, 2022, respectively.
Currently, it is trading 44.43 percent below its 52-week high and 4 percent above its 52-week low.Market capitalisation stands at Rs 3,691.99 crore.
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