Rallis India - Downgrade earnings on back of margin pressure BUY:: Emkay

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Rallis India

Downgrade earnings on back of margin pressure

BUY

CMP: Rs 1,390                                       Target Price: Rs 1,735

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n     Q4FY11 revenues of Rs 2.3 bn, +14% yoy,  was lower than our estimates of Rs 2.5 bn, adjusted EBITDA of Rs 380 mn, 2% yoy, was lower than our estimates of Rs 500 mn 

n     Shift in product mix towards herbicides, unseasonal rainfall hurt margins. APAT at Rs 220 mn (-7% yoy) was below our estimates of Rs 333 mn

n     Acquisition of Metahelix, commissioning of Dahej plant and I-Shakti range of pulses to remain future growth drivers.

n     Adjust FY12E/13E EPS estimates downward by 8%/4% to Rs 88.8/116. Consequently, target price downgraded to Rs 1,735. However, we re-iterate our BUY recommendation