ICICIdirect has downgraded Rallis India to Hold from Buy earlier. It has revised price target to Rs 250.
Rallis India posted a sharp drop in consolidated net profit for the quarter ended June 2015. During the quarter, the profit of the company declined 10.52% to Rs 330.90 million from Rs 369.80 million in the same quarter last year. Revenues for the quarter declined marginally 0.05% to Rs 4,683.10 million, compared with Rs 4,685.40 million for the prior year period.
Commenting on the quarterly financial performance, ICICIdirect said, ''Rallis India reported a disappointing set of Q1FY16 numbers. The major disappointment came in from the standalone crop protection business, which de-grew 15.6% YoY. The only silver lining came in the form of the robust performance from Metahelix (seed division)."
On outlook, the stock broker said, "After a robust spell of rains in June in the current monsoon season leading to robust sowing by domestic farmers, rainfall has been deficient for a larger part of July with monthly rainfall till date at-26% of LPA. De-growth in the standalone crop protection business in the first quarter of the financial year is a cause for concern while Q2FY16 will be closely watched before formulating a long term view on the stock."
"We have downward revised our estimates for Rallis (FY15-17E sales, PAT CAGR revised downward to 8.2%, 11.1% from 12%, 15.8% respectively) with a revised target price of Rs 250 and a Hold rating. We have valued Rallis at 25x P/E on FY17E EPS of Rs 10,'' it said.
