Rallis India Q3 Results Review - Dismal Performance; Miss On All Fronts: Prabhudas Lilladher

Prabhudas Lilladher Report

Rallis India Ltd.'s Q3 FY23 results were below of our and consensus expectations, primarily led by subdued growth across business segments. Domestic crop protection revenue grew 8% YoY (largely led by price growth) resulting in overall crop care segment growth of 1% YoY.

Rallis India launched three new products under 9(3) and 9(4) category in nine months-FY23.

Export revenues were down by 7% YoY, due to higher inventory build-up resulting in lower volumes. While, in contract research and manufacturing services business- PEKK is expected to revive by FY23 end.

Seed revenues were down 14% YoY to Rs 240 million. Gross margins contracted by 80 basis points YoY coupled with higher opex (including one off of Rs 40 million towards provisions for retrospective rent demand by Mumbai Port Authority) resulting into Ebitda margin contraction of 220 bps YoY to 8.5%.

We expect revenue/profit after tax compound annual growth rate of 14%/16% over FY22-FY25E, led by domestic market share gains and export ramp-up.

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