ICICI Direct recommended Hold rating on Rallis India with a target price of Rs 240 in its research report dated May 06, 2020.
ICICI Direct's research report on Rallis India
Rallis reported muted topline growth of 2% YoY to Rs 346 crore. Growth was hampered by a delay in dispatches for both domestic and international market post lockdown. The delay in dispatches for the domestic market remained at Rs 16 crore while the same for the international market was at Rs 53 crore. The crop protection segment posted growth of 1.2% YoY to Rs 322 crore while the seed business remained at Rs 24 crore (+4.3% YoY). Higher other expenses due to one-time Covid-19 related charges along with forex MTM impacted EBITDA, which came in at a loss of Rs 10 crore against profit of Rs 7 crore in Q4FY19. Crop protection EBITDA remained at Rs 6 crore against Rs 20 crore in Q4FY19 while the same for the seed business was a loss of Rs 19 crore against a loss of Rs 14 crore in Q4FY19. Adjusting gain on sale of flats to the tune of Rs 11.4 crore, bottomline was at a loss of Rs 10.7 crore against profit of Rs 1.4 crore In Q4FY19.
We value the company at 19x PER of FY22E earnings estimates (implied EV/EBITDA 12x FY22E). We arrive at a target price of Rs 240. We have a HOLD recommendation on the stock.
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