BackRallis Q3 show lifted by good gains as export volumes see revival
The inline performance by Rallis though remains a positive the prospects also remain firm. Good reservoir levels and healthy farmer income should keep demand momentum for agro-inputs firm.
PremiumRallis India Ltd., reaping benefits of buoyant agri-inputs demand in the country, posted a strong Q3 show. The normal monsoon and good winter crop sowing ensured a strong demand for agricultural commodities during the December quarter. The company, with presence across the value chain in seeds, soil conditioners, crop protection chemicals, plant growth nutrients saw benefits across all segments. Seed business showed an impressive growth of 38% y-o-y, while domestic crop care business grew 5%. The revival in export businesses also remained a key highlight during the quarter.
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The strong seeds business growth was mainly led by volume growth in Maize & bajra. Better price realisation in Maize, Paddy, Bajra also helped. With good growth in crop care and seeds business, the domestic business could grow 15%. The benefits on export revenues, however, were limited due to muted realisation growth in its international business despite strong volume growth. This meant overall revenues could still grow only 7%.
The company’s operating performance impressed as despite some inventory adjustments the company saw steady margins. The gross margin improvement in crop care meant that the segment’s EBITDA margins expanded by 213 basis points to 15.5% as compared to 13.4%. last year. This pulled the overall operating performance despite a one-time charge of ₹7.8 crores on account of substandard seed stocks and non-moving items. The Ebitda grew in line with the revenue growth while margins remained steady at 10.5%.
Meanwhile net profit growth of 7% was also aided by some gains on sale of the assets during the quarter.
The inline performance by Rallis though remains a positive the prospects also remain firm. Good reservoir levels and healthy farmer income should keep demand momentum for agro-inputs firm. Nevertheless, the base also remains high and the company will need to maintain strong execution. The same is also necessary to maintain valuations of 20 times FY22 earnings estimates that are certainly not cheap.
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