Sell Rallis India; target of Rs 216: Dolat Capital Market

Dolat Capital Market's research report on Rallis India

Rallis’ 2QFY21 earnings print was below our estimates by 7.1% on sales and 21.2% on EBITDA. Sales/EBITDA/PAT stood at Rs 7.25bn/1.17bn/830mn down by 3.2/1.6/3.3% YoY. We had anticipated fall in sales of international business, however the reported fall was even steeper (down 29% YoY to Rs 1.54bn) than our expectations. Domestic business did report a decent growth by 8% YoY to Rs 4.86bn, with seeds business growing at 29% YoY to Rs 730mn. EBITDA margins stood at 16.1% up by 30 bps YoY owing to stability in raw material pricing coming from domestic business. Gross margins improved by 210 bps YoY to 38.1%.

Outlook

We remain sellers on Rallis and roll forward FY23 estimates, value Rallis at 18x FY23E EPS with a target price of Rs 216/share.