Rallis India Ltd. share price target

Rallis India Q2FY26: Weak topline performance, Margins remain stable Revenues stood at 861 crore, down 7.2% YoY on account of erratic and prolonged rains which impacted field activities and spray applications. The crop care business (88% of the revenues) reported a decline of 3% YoY at 760 crore, as growth in B2B business (14% YoY) was undone by 10% degrowth in B2C business due to weather disruptions. The seeds business (12% of the revenues) reported a decline of 28% YoY, at 101 crore. EBITDA for the quarter stood at 154 crore, down 7% YoY translating into margins of 18%, up ~220 bps QoQ/ flat YoY. EBITDA for the crop care...

dented overall performance. Key highlights are: 1) domestic revenue grew 25% YoY led by both price and volume growth of 13%/12% YoY respectively (FY22 +14% YoY); while crop care segment was up 8% YoY (FY22 +11% YoY), 2) export revenues were down 8% YoY (FY22 +6% YoY), 3) seeds revenue...

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Domestic business up 9% YoY largely from price led growth. Rallis India's (RALI) 3QFY22 results were broadly in line with ours as well as consensus estimates. Key highlights are: 1) domestic revenue grew 9% YoY largely from price-led growth (9MFY22 +12% YoY); while crop care segment was up 13% YoY (9MFY22 +12% YoY); 2) export revenue surged 19% YoY...

Upcoming capex likely to aid revenue ahead Out of the earmarked capex of | 800 crore over the next five to six years, the company has been initially incurring crop formulation capex to the tune of | 98 crore and MPP plant at Dahej with total cost of | 105 crore. Both of these plants are expected to get commissioned by H2FY22. Since it has historically managed asset turn of 2.25-2.5x, we expect the same to sustain, going ahead. Thus, this bodes well for future growth outlook. Apart from this, it has also been working on backward integration, which should boost gross...

RALI's 4QFY21 result outperformance vis--vis our estimates was driven by higher than anticipated international business revenue (up 73% YoY). Deteriorating sales mix in favour of Metribuzin led to 210bps contraction in blended gross margins @ 41.4% (PLe 43%). Ex off-Metribuzin, international business is on a firm footing with volume growth in all molecules. Domestic business performance is also on expected lines with 14% revenue growth. We expect margin pressure to peak out in a quarter or so, as low Metribuzin...

Upcoming capex likely to aid revenue ahead Out of the earmarked capex of | 800 crore over the next 5/6 years, the company has been initially incurring crop formulation capex to the tune of | 110 crore and MPP plant at Dahej with total cost of | 130 crore. Both of these plants are expected to get commissioned by H2FY22. Since it has historically managed asset turn of 2.25-2.5x, we expect the same should likely to sustain in the coming time and thus bodes well for future growth outlook. Apart from this, it has also been doing backward integration, which should likely...

In our recent interaction with management of RALI, they reiterated their Change in Estimates | Target | Reco strategy of both, capacity & portfolio expansion driven growth. Capacity is being enhanced in both domestic (formulation) and international (MPP,...

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...