“Rallis India reported consolidated revenues of Rs 2.2bn, -7% yoy, lower than est of Rs 2.8bn . On a standalone basis, revenues degrew by 14% yoy to Rs 2.0bn lower than est of Rs 2.6bn. Metahelix reported revenues of Rs 166mn during the quarter. Consol topline degrowth of 7% yoy is the first instance in the last 9 quarters when Rallis has reported degrowth in revenues. Standalone revenues degrew by 14% yoy (incl. Dahej). We believe pressure on farmers’ profitability due to declining farm incomes has shrunk the farmers’ kitty resulting into reduced consumption of agrochemicals.”
“Rallis reported consolidated EBITDA of Rs 124mn, -68%yoy, significantly lower than est of Rs 427mn. Consol EBITDA margin at 5.7% was lower than our est at 15.4%. On a standalone basis, Rallis reported EBITDA of Rs 132mn, -65% yoy with margins of 6.6% (lower than est of 16%). Consol APAT for the quarter stood at Rs 30mn, -86% yoy. APAT has been adjusted for Rs 44mn of FX gain & 71mn of cessation cost credit. Rallis declared final dividend of Rs 1.2/share. During the quarter, Rallis acquired additional stake of 15.43% in Metahelix taking its tally to 75.64% Rallis has entered into an agreement to acquire majority stake of 51% in Zero Waste Agro Organics Pvt Ltd (ZWAOPL), a Maharashtra based organic manure and soil conditioners manufacturing company. The acquisition is an all cash deal for Rs 290mn. Rallis will also have exclusive sales & marketing arrangements with ZWAOPL for domestic and int’l markets. Management expects revenue from this business to exceed Rs 1bn cumulative over 5 year period.”
“Shrinking farmers profitability due to declining farm incomes has impacted the consumption of agrochemicals in the domestic market. Rallis’s topline degrowth clearly indicates that there is pressure in the domestic market in the current scenario and onset of monsoons this kharif season is going to be a very crucial determinant of the future ahead. Maintain HOLD with target price of Rs 120,” says Emkay Global Financial Services research report.
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