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Recommendations India

Rallis India 1QFY2015 performance highlights and results update

July 22, 2014, Tuesday, 04:33 GMT | 23:33 EST | 08:03 IST | 10:33 SGT
Contributed by Angel Broking


For 1QFY2015, Rallis India (Rallis) posted a robust set of numbers on the sales front. Sales grew 13.7% yoy to Rs.465.4cr (V/s Rs.409.3cr in 1QFY2014). The EBITDA margin for the quarter came in at 11.9% V/s 12.9% as in the corresponding quarter of last year, in spite of the GPM coming in at 50.2% V/s 48.3% in 1QFY2014. The correction in the EBITDA margin was mainly due to a 17.5% yoy rise in other expenses. Further, during the quarter, the other income came in at Rs.6.3cr V/s Rs.4cr in the corresponding quarter of last year. Consequently, the PAT came in at Rs.36.9cr (V/s Rs.27.5cr in 1QFY2014), ie a yoy growth of 34.5%. The adj net profit growth stood at 5.7% yoy for the quarter. We remain Neutral on the stock.

Robust growth in sales: For 1QFY2015, the company posted net sales of Rs.465.4cr V/s Rs.409.3cr in 1QFY2014, ie a growth of 13.7% yoy. The EBITDA margin came in at 11.9% V/s 12.9% during the corresponding quarter of last year, in spite of a GPM of 50.2% for the quarter V/s a GPM of 48.3% in 1QFY2014. This was mainly due to a 17.5% yoy rise in other expenses. Further, during the quarter, the other income came in at Rs.6.3cr V/s Rs.4cr in the corresponding quarter of last year. Consequently, the PAT came in at Rs.36.9cr (V/s Rs.27.5cr in 1QFY2014), ie a yoy growth of 34.5%. The adj net profit growth for the quarter stood at 5.7% yoy.

Outlook and valuation: The Management is confident about the long-term prospects of the agrochemicals industry. We expect Rallis to register a CAGR of 16.4% and 16.0% in net sales and profit respectively, over FY2014-16. At the current levels, the stock is trading at a fair valuation of 20.7x FY2016E EPS. We maintain our Neutral recommendation on the stock.