ICICI Direct recommended hold rating on Rallis India with a target price of Rs 155 in its research report dated May 02, 2019.
ICICI Direct's research report on Rallis India
Rallis reported a subdued financial performance with revenue down 8.5% YoY to Rs 339.7 crore, primarily due to the poor show from the standalone business (down 9% YoY, ~94% of consolidated revenue). Revenues from the standalone business were impacted largely due to muted sales growth from domestic market but decent growth from international market arrested decline, to some extent. On the other hand, Metahelix reported stable growth of 2.3% YoY to Rs 22.5 crore. Adjusting one-time charge of Rs 7.2 crore towards retirement benefits in employee expenses and Rs 5 crore towards contribution to electoral fund, standalone EBITDA was at Rs 31 crore (down 27.4% YoY) while Metahelix registered operational loss of Rs 13 crore against a loss of Rs 7.9 crore in Q4FY18. Higher other income (Rs 11 crore vs. Rs 1.6 crore in Q4FY18) helped the company to maintain its bottomline performance. Adjusted consolidated PAT was at Rs 13.6 crore (-31.3% YoY).
We lowered our P/E multiple to 15x on FY21E (implied EV/EBITDA of ~8.5x) due to inventory built up in the system and poor sales outlook from domestic market. We arrived a target price of Rs 155 and assigned HOLD rating on the stock.
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