Rallis India - 4QFY2016 Result Update - Angel Broking

For 4QFY2016, Rallis India (Rallis) posted sales of Rs. 342cr V/s Rs. 315cr in 4QFY2015, a growth of 8.6% yoy. The same was driven by higher offtake in export orders which have been getting differed since the past two quarters due to a challenging environment faced by global companies. Domestic growth continued to remain muted during the quarter. On the operating front, the gross margin came in at 43.3% V/s 47.0% in 3QFY2015, leading the OPM for the quarter to decline to 10.4% V/s 12.3% in 3QFY2015. In spite of the same, the PAT came in at Rs. 32cr V/s Rs. 21cr in 3QFY2015, a growth of 51.3% yoy. This was on back of the depreciation dipping by 55.4% yoy and a 132.1% yoy growth in other income (which came in at Rs. 15cr V/s Rs. 6cr in 4QFY2015). We remain Neutral on the stock.

Margins disappoint: Company posted a robust growth in the top-line of 8.6% yoy to Rs. 342cr, mainly driven by exports. On the operating front, the gross margin for the quarter came in at 43.3% V/s 47.0% in 4QFY2015, while the OPM came in at 10.4% V/s 12.3% in 4QFY2015. The PAT came in at Rs. 32cr V/s Rs. 21cr in 4QFY2015, posting a growth of 51.3% yoy which is in spite of a contraction in the OPM. The PAT was aided by a 55.4% yoy dip in depreciation and 132.1% yoy growth in other income (which came in at Rs. 15cr V/s Rs. 6cr in 4QFY2015).

Outlook and valuation: For FY2016-18E, we expect a CAGR of 15.0% and 22.3% in net sales and profit, respectively, with recovery expected in FY2017E. At the current levels, the stock is trading at a fair valuation of 17.9x its FY2018E EPS. Hence, we maintain our Neutral recommendation on the stock.

Shares of RALLIS INDIA LTD. was last trading in BSE at Rs.194.5 as compared to the previous close of Rs. 195.55. The total number of shares traded during the day was 27740 in over 708 trades.

The stock hit an intraday high of Rs. 197.9 and intraday low of 193. The net turnover during the day was Rs. 5410073.

Source : Equity Bulls

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