2 months ago
Nuvama Retains 'Reduce' on Rallis India Despite Healthy Q1
Rallis India, a company that makes products for farmers, had a good first quarter with more money coming in.
But a company called Nuvama thinks the stock isn't a good buy right now.
They say the good sales might cause problems later, and other things might make it harder for the company to grow.
Even though Rallis did well this quarter, Nuvama still says to be careful with the stock.
Rallis India reported a 6.8% YoY revenue growth in Q1 FY27.
Nuvama noted a surprising 15% volume growth in domestic formulations.
EBITDA was overstated due to a one-time Rs 35 crore reversal in employee costs.
Nuvama retains 'Reduce' rating on Rallis India due to lack of growth triggers.
Shares of Rallis India were trading 0.37% lower at Rs 227.50.
- Who
- Nuvama Institutional Equities, Rallis India Ltd
- What
- Nuvama retains 'Reduce' rating on Rallis India despite healthy Q1 performance
- Where
- India
- When
- Q1 FY27
- Why
- Lack of growth triggers and potential headwinds in the near term
Nuvama's Cautious Outlook
Rallis India's Q1 Performance
Stock Rating
Nuvama's Cautious Outlook
Nuvama retains 'Reduce' rating due to lack of growth triggers.
Rallis India's Q1 Performance
Rallis India reported a healthy Q1 with 6.8% revenue growth.
Volume Growth
Nuvama's Cautious Outlook
Cautions about potential sales returns in Q2 due to healthy volume growth.
Rallis India's Q1 Performance
Achieved 15% volume growth in domestic formulations despite a weak sowing season.
EBITDA Performance
Nuvama's Cautious Outlook
EBITDA is overstated due to a one-time reversal of Rs 35 crore in employee costs.
Rallis India's Q1 Performance
EBITDA is in-line with Street's estimates after adjusting for the one-time reversal.
Key facts
- Revenue Growth
- 6.8% YoY
- Volume Growth
- 15% in domestic formulations
- EBITDA Adjustment
- Rs 35 crore reversal in employee costs
- Stock Rating
- Reduce
- Target Price
- Rs 216
- Current Market Price
- Rs 227.50
- Promoter Stake
- 55.04% by Tata Chemicals
Quotes
Nuvama Institutional Equities
Research analyst reporting on Rallis India
“"Our rating, TP and target multiples stay unchanged, valuing Rallis at 15x FY28E EPS with a TP of Rs 216; retain 'REDUCE'. At CMP, the stock trades at 17.3x FY28E EPS."”
businesstoday.in
“"Healthy volume growth in the domestic business can have ramifications for sales returns in Q2 FY27, which we fear as progress on sowing appears weak."”
businesstoday.in
Sources
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