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Recommendations India

Rallis India 4QFY2014 performance highlights and results update

April 29, 2014, Tuesday, 15:51 GMT | 10:51 EST | 20:21 IST | 22:51 SGT
Contributed by Angel Broking


Rallis India (Rallis), reported robust numbers for 4QFY2014. The company posted sales and adj. net profit of Rs.324cr and Rs.19cr, registering a growth of of 16.2% and 71.5% yoy respectively. An expansion in the OPM from 8.2% in 4QFY2013 to 10.5% in 4QFY2014, along with reduction in finance cost and lower tax provision aided the adj. net profit before tax to come in at Rs.19cr, posting a growth of 71.4% yoy. We recommend a Neutral rating on the stock.

Robust growth: The company posted sales and adj. net profit of Rs.324cr and Rs.19cr, registering a growth of yoy of 16.2% and 71.5% respectively. The gross profit margin during the quarter came in at 41.4%, an expansion of 448bp yoy; which aided the OPM to come in at 10.5% vs 8.2% in the corresponding quarter of last year, though it was lower than 12.8% in 3QFY2014. This along with reduction in finance cost, which declined by 33.2% yoy, along with the reduced tax provision, aided the adj. net profit before tax to come in at Rs.19cr, posting a growth of 71.4% yoy. The tax as a percentage of PBT was 34.1% vs 42.9% during the corresponding quarter of last year. Other income, which came in at Rs.9cr vs Rs.7cr in the corresponding quarter of last year, contributed to the net profit growth during 4QFY2014.

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 17.6x FY2016E EPS. Hence, we maintain our Neutral recommendation on the stock.