Buy Rallis India; target of Rs 225: ICICI Direct

ICICI Direct's research report on Rallis India

Rallis India reported a healthy performance in Q1FY19 Consolidated revenues in Q1FY19 were at Rs 573.1 crore, up 28.6% YoY. Standalone revenues in Q1FY19 were at Rs 352.4 crore, up 42.5% YoY. Revenues of subsidiaries (Metahelix) in the seasonally important quarter i.e. Q1FY19 were at Rs 220.7 crore, up 11.4% YoY Consolidated EBITDA in Q1FY19 came in at Rs 83.1 crore with corresponding EBITDA margins at 14.5% (down 110 bps YoY). In the standalone business, Rallis continued to witness raw material pricing pressure, which was, to some extent, mitigated by operating leverage benefits with stable employee as well as other expenses EBITDA margins at subsidiaries were at 29.6% (down 120 bps YoY) Consolidated PAT in Q1FY19 came in at Rs 54.6 crore, up 20.4% YoY.

Outlook

On a consolidated basis, we expect revenues & PAT to grow at a CAGR of 10.8% & 14.2%, respectively, in FY18-20E (build in 30 bps EBITDA margin improvement in FY18-20E). We value Rallis at Rs 225 i.e. 20x P/E on FY20E EPS of Rs 11.2 and maintain our BUY rating on the stock.

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Read More First Published on Jul 20, 2018 05:08 pm