Rallis India - Challenges Galore; Result Update Q3FY15 :: Edelweiss

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

��

-->

Rallis India’s (Rallis) Q3FY15 consolidated revenue and PAT of INR3.9bn (down 2.8% YoY) and INR0.27bn (down 5.0% YoY) belied our INR4.5bn and INR0.32bn estimates, respectively. The disappointment was primarily on account of lower-than-expected agrochemical sales and seed’s EBITDA margin. Key positives were: (1) seed business revenue surged ~55% YoY; (2) encouraging response to newly launched agrochemical products; and (3) gross margin catapulted 590bps YoY. Key negatives included: (1) standalone (primarily agrochemical) sales declined 6.2%; (2) pressure in domestic as well as export business; (3) INR71mn one-off charges impacted EBITDA margin; and (4) stretched working capital. However, management continued to focus on improving cash management. It indicated that the company has strong product pipeline of agrochemicals as well as seeds. Also, steep correction in crude oil price will benefit the company in coming quarters. We believe higher contribution from newly launched products, margin expansion in seed business and enhanced capacity utilisation at Dahej plant will propel Rallis’ growth.

Agrochemical sales disappoint; seed offsets impact partially

Rallis’ consolidated revenue declined 2.8% YoY, primarily led by 6.2% dip in standalone sales. However, seed sales jumped 55% YoY. Domestic agrochemical market was under pressure on account of lower kharif yields & crop prices and reduced rabi acreage. Further, export business had to grapple with competitive pressures and softened demand. EBITDA margin plummeted 50bps YoY to 13.4% led by stock-related adjustment of INR54mn. The company’s consolidated PAT fell 5.0% YoY to INR0.26bn.

LINK
https://www.edelweiss.in/research/Rallis-India--Challenges-Galore;-Result-Update-Q3FY15/28088.html