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For 2QFY2012, Rallis India (RAIL) reported 18.4% growth in its net sales.
However, net profit growth came in almost flat. We expect RAIL to register a
CAGR of 20% and 23% in its net sales and profit over FY2011-13, respectively.
We remain Neutral on the stock.
Robust growth on the sales front: RAIL’s revenue for the quarter grew by 18.4%
yoy to `430cr. Exports growth came in at 25% yoy and domestic sales stood at
12% yoy. However, the company witnessed a significant erosion of 292bp yoy in
its gross margin to 39.0%. Further, staff cost grew by 19.9% yoy. Consequently,
OPM declined by 250bp yoy to 20.5% and EBITDA grew only by 5.5% yoy. This
resulted in flat growth in net profit to `58.7cr.
Outlook and valuation: Management is confident about the prospects for the
agrochemicals industry. The company expects to outperform the industry, given its
product pipeline. Overall, we expect RAIL to register a CAGR of 20% and 23% in
its net sales and profit over FY2011-13, respectively. At current levels, the stock is
trading at fair valuations of 17.3x FY2013E EPS. Hence, we maintain our Neutral
recommendation on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
For 2QFY2012, Rallis India (RAIL) reported 18.4% growth in its net sales.
However, net profit growth came in almost flat. We expect RAIL to register a
CAGR of 20% and 23% in its net sales and profit over FY2011-13, respectively.
We remain Neutral on the stock.
Robust growth on the sales front: RAIL’s revenue for the quarter grew by 18.4%
yoy to `430cr. Exports growth came in at 25% yoy and domestic sales stood at
12% yoy. However, the company witnessed a significant erosion of 292bp yoy in
its gross margin to 39.0%. Further, staff cost grew by 19.9% yoy. Consequently,
OPM declined by 250bp yoy to 20.5% and EBITDA grew only by 5.5% yoy. This
resulted in flat growth in net profit to `58.7cr.
Outlook and valuation: Management is confident about the prospects for the
agrochemicals industry. The company expects to outperform the industry, given its
product pipeline. Overall, we expect RAIL to register a CAGR of 20% and 23% in
its net sales and profit over FY2011-13, respectively. At current levels, the stock is
trading at fair valuations of 17.3x FY2013E EPS. Hence, we maintain our Neutral
recommendation on the stock.
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