Rallis India reported Q4FY13 results broadly in line with expectations. Adjusted PAT
for the quarter stood at Rs105m, 253% YoY, driven by better rabi season & lower
base. Working Capital requirements also reduced to Rs1.8bn compared to Rs2.2bn
at the end of H1FY13. We believe Rallis will continue to benefit from its leadership
position in domestic agrochemicals market, strong product pipeline in Metahelix
and ramp‐up in Dahej. Stock is currently trading at 15.7x FY14E earnings (long‐
term average of 18x based on 1‐yr forward earnings). Maintain ‘Accumulate’ with
TP of Rs140.
! Q4FY13 results were broadly in line: Rallis reported consolidated sales of
Rs2.9bn, 32% YoY (against an est. of Rs2.5bn). Standalone sales stood at
Rs2.6bn, 33% YoY, while Metahelix sales stood at Rs196m, 18% YoY. However,
consolidated margins at 9.9% were lower than estimate of 11.7%. EBITDA for
the quarter stood at Rs282m, 128% YoY, in line with estimates. Adj. PAT for the
quarter stood at Rs105m, 253% YoY (low base effect) in line with estimates.
! New product launches, ramp‐up in Dahej & strong product pipeline of
Metahelix to drive growth: We expect domestic agrochemicals industry to
rebound over the next year and Rallis being one of the leading players is
expected to be a major beneficiary. Consistent launch of new products & rampup
in Dahej would further spur growth. Metahelix has a strong product portfolio
across corn, millets, paddy and vegetable seeds and is well-positioned to
achieve 25% p.a. growth over the medium-term.
! Maintain ‘Accumulate’ with target price of Rs140: Rallis is currently trading at
15.7x FY14E earnings of Rs7.8 (long-term average of 18x based on 1-yr forward
earnings). Rallis continues to trade at a premium of 25-30% to domestic peers
which, we believe, will continue over the medium term. We value Rallis at 18x
FY14E earnings, resulting in target price of Rs140 (potential upside of 14%) and
recommend ‘Accumulate’.
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