Hold Rallis India; target of Rs 240: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Rallis India

We trim our EPS estimates by 7%/5%/5% for FY23E/24E/25E citing slower revenue growth & margin pressure and downgrade to ‘HOLD’ from BUY with revised TP of Rs240 from Rs250 earlier based on 18xFY25 EPS (due to limited upside from the CMP). Rallis India (RALI) 3QFY23 results were below of our and consensus expectations, primarily led by subdued growth across business segments. Domestic crop protection (CP) revenue grew 8% YoY (largely led by price growth) resulting in overall crop care segment growth of 1% YoY. The company launched 3 new products under 9(3) and 9(4) category in 9MFY23. Export revenues were down by 7% YoY, due to higher inventory build-up resulting in lower volumes. While, in CRAMS business- PEKK is expected to revive by FY23 end. Seed revenues were down 14% YoY to Rs240mn. Gross margins contracted by 80bps YoY coupled with higher opex (including oneoff of Rs40mn towards provisions for retrospective rent demand by MBPA) resulting into EBITDA margin contraction of 220bps YoY to 8.5%.

Outlook

We expect Revenue/PAT CAGR of 14%/16% over FY22-FY25E, led by domestic market share gains and export ramp-up. Downgrade to ‘Hold’.

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Rallis India - 20 -01-2023 - prabhu