Prabhudas Lilladher: Buy Rallis India Stock With Target Price Of Rs. 250

Outlook of Rallis India (RALI)

Rallis India is a Tata group company with over 150 years of history. The company's business is manufacturing agrochemicals and supplying agricultural inputs along the entire value chain, from seeds to organic plant development nutrients. The company also takes orders from multinational companies to manufacture chemicals.

Rallis India is a small-cap chemical sector company with over Rs. 4,243 Crores capitalization. The stock's current market price is Rs. 218, and the stock has a 52-week high of 325 and a 52-week low of Rs. 182. Currently, the stock is heading towards its 52-week low sharply, but Prabhudas Lilladher is bullish.

 

Returns of Rallis India Over The year

The stock does not have a history of good returns over the medium and short-term periods. As the stock has given negative returns of over -2.68% in one month, over 3 months, the stock gave positive returns of 15.94%. And over one year, the stock gave negative returns of -24.03%; in three years, the stock gave 23.7%, and in 5 years of the period, the stock gave 1.04%.

Buy Call Of Prabhudas Lilladher On Relish India

As mentioned in the latest report of Prabhudas Lilladher, "We retain 'BUY' on Rallis India (RALI) with a target price of Rs250 (Rs230 earlier) based on 18xFY25 EPS even as we reduce our EPS estimates by 5.5% and 4.9% for FY23/24E on near term margin pressures due to high-cost raw material inventory in 2Q23 despite 4-5% price hike in June '22."

To summarize the report in one headline, "Margin pressure likely to persist in the near term..!!" mentioned Prabhudas Lilladher's report.

Highlights Of Prabhudas Lilladher Report On Rallis India

The latest report of Prabhudas Lilladher mentioned, "RALI in their pre-quarterly conference call highlighted that

• Domestic crop care business likely to post subdued performance primarily led by tepid demand due to disproportionate rainfall resulting in lower pest infestation and miss in sprays.

• Exports at a better-off position led by improved demand globally supported by better product and price mix; however, they have a cautious outlook due to drought in US and European markets.
• Herbicides continue to outperform (to post double-digit growth in 2Q) compared to the insecticides and fungicides category.

• Launched 3 new 9(3) molecules in 1HFY23 as against guidance of 4 product launches in FY23E, additionally launched 5 new 9(4) molecules in 1H'23.

• Crop nutrition business to post double-digit revenue growth, aided by better product mix.

• However, high-cost inventory to exert pressure in the near term remains confident of maintaining absolute EBITDA led by recent price hikes."