Rallis reported healthy gross margin expansion of 144bps and a similar increase in operating (EBITDA) margins to 15.6%, which drove earnings growth in 9MFY21.
Chirag Batavia • 12 April 2021
Rallis India Ltd
- Rallis reported healthy gross margin expansion of 144bps and a similar increase in operating (EBITDA) margins to 15.6%, which drove earnings growth in 9MFY21.
- The international business showed signs of recovery in Q3FY21 led by a sequential increase in Metribuzin pricing and higher volumes for AIs (Active Ingredients) leading to 35% qoq growth to Rs210 cr.
- Rallis management indicated that the domestic agrichemical industry growth is anticipated to remain at 10-11% in FY21.
- The company maintained its guidance of launching two new 9(3) registration products every year for the next few years.
- We expect the company to deliver robust earnings growth over the next few years driven by near-term recovery in the international business and medium-term capacity-led growth across segments. We value the stock based on 18X December 22E EPS.
Rallis India Ltd: ADD
Dated: 12 th April 2021
CMP: Rs.269
Fair Value: Rs.310
Potential Upside: 15%
Market Cap: Rs.5,223 Cr
Time Frame: 12 months
Note: The above is a brief note on the company, based on the inputs of a KIE research report dated 19 th January 2021, which is available on our website at: https://www.kotaksecurities.com/ksweb/ResearchCall/Fundamental .
Disclaimer: http://bit.ly/2n5AxIE
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