Rallis India Ltd's Q3FY19 consolidated net profit declines 44.66% yoy to Rs13.88cr : Misses Estimates

The company’s consolidated revenue stood at Rs417.35cr, up 6.97% yoy but down 36.17% qoq.

Jan 17, 2019 03:01 IST India Infoline Research Team

Rallis India Ltd Q3FY19

Consolidated Results Q3FY19: (Rs. in cr)

Q3FY19 YoY (%)
Revenue 417.35 7.0
EBITDA 27.63 [26.9]
EBITDA Margin (%) 6.6 [306]
Net Profit (adjusted) 13.88 [44.7]
***EBITDA margin change is bps
Rallis India Limited's Q3FY19 consolidated revenue came in at Rs417.35cr, up 7% yoy. The operating profit declined by 26.9% yoy to Rs27.63cr in Q3FY19. The EBITDA margin declined by ~306bps yoy to 6.6% in Q3FY19. The adjusted consolidated net profit (attributable to shareholders) of the company for Q3FY19 stood at Rs13.88cr which is down 44.7% yoy. The revenue,EBITDA and net profit missed the estimate of Rs470cr, Rs43cr and Rs24cr by 11%, 36% and 42% respectively.

• In terms of revenue, the performance of the company during the quarter has witnessed mid single-digit growth despite overall decline in rabi acreages and erratic rainfall in India. Export revenue expanded owing to better performance in US and Europe.
• Domestic business was aided by adding new distributors, revising incentive structure, extending credit period and focus on specialty product launches. Export business was aided by investments in additional capacities, product registrations across international markets and increased higher-margin exports.
• The gross profit margin declined by ~266bps yoy to 39.5% in Q3FY19. This is on account of inflationary imported raw material prices. Further, we anticipate that benign crop prices, subdued rabi season and declining farm income would be possible reason for not taking significant price hikes in the domestic market.
• However, operating profit and margin witnessed significant headwinds like higher input cost (imports from China). This led to EBITDA margin contraction by ~306bps yoy. Improvement in geographic mix and higher value-added sales partially offsets the inflationary input costs.
• The effective tax rate of the company increased to 29.9% in Q3FY19 as against 11% in Q3FY18. This also led to further decline in the net profit of the company during the quarter.
• The Board of Directors of the company has accorded its consent to the merger of Metahelix Life Sciences Ltd (a wholly owned subsidiary of the Company) with the company under a Scheme of Amalgamation subject to necessary approvals.
• The board has approved Rs100cr investment in expanding capacity of key products.

Technical View:

Rallis India Ltd is currently trading at Rs. 172.50, up by 1.4 points or 0.82% from its previous closing of Rs. 171.10 on the BSE.
The scrip opened at Rs. 171.35 and has touched a high and low of Rs. 175.40 and Rs. 171.35 respectively. So far 5,76,665 (NSE+BSE) shares were traded on the counter. The stock is currently trading below its 200 DMA.

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