HDFC Securities' research report on Rallis India
Rallis India reported strong results� for 1QFY19. Consolidated revenues stood� at Rs� 5.73bn� (+29.7% YoY), the performance was largely driven by strong� volume� growth� and� marginal� price hike. As the seeds business is largely� Kharif� focused, subsidiary revenues (Metahelix) grew by 11.3% YoY to Rs� 2.20bn. Consolidated EBITDA stood at Rs 831mn (+19.8% YoY), EBITDA margins� declined� by� 120bps YoY to 14.5%. Despite the steep fall in gross margins to 39.6% (-654bps YoY), the drop in employee cost (-146bps YoY) and other� expenditures� (-387bps YoY) owes to operating leverage. Consequently APAT was at Rs 547mn (+20.7% YoY). For 1QFY19,� Rallis� margins� were� under pressure largely on 1) The price� control� on cotton seeds and return of high value inventory by� dealers, 2)� 1QFY19� is more of the generic product sales, which has� low� margins� 3)� Raw� material� supply� constraints because of plant shutdown� in China and 4) The new CSM division, which commissioned in 4QFY18� is� yet� to stabilize.
Outlook
The management has indicated the price� hike in coming quarters. The result of uptick in crop sowing will be reflected more in 2QFY19, which is also crucial quarter for Rallis.
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Read More First Published on Jul 18, 2018 04:51 pm
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