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Domestic brokerage and research firm Prabhudas Lilladher is bullish on Rallis India shares and has upgraded the chemical stock's rating to ‘Buy’, given its recent correction in the stock price and has a target price of 230.

Rallis India in its first ever pre-quarterly conference call highlighted that domestic crop care and seeds segment will likely post stable performance in 1QFY23, placements have progressed as per plan and liquidation will take place in subsequent quarters.

The company also highlighted that exports will likely grow better than other segments (lower base of last year -8% YoY to aid growth). Further, pressure on margins likely to persist in near term, however, remains confident to maintain absolute EBITDA.

The company added that price hikes taken to the tune of 4-5% as compared to March 2022 levels to mitigate inflated RM cost, and capex plans are on schedule, the brokerage house's note highlighted.

“The management stated that recent correction in RM prices coupled with high cost inventory will exert pressures on 1HFY23 margins. However, 4-5% price hikes (as compared to March 2022 levels) will help to partially mitigate the same," Prabhudas Lilladher said.

Rallis India is part a subsidiary of Tata Group's Tata Chemicals. Tata Chemicals is the world’s second largest producer of soda ash with manufacturing facilities in Asia, Europe, Africa and North America. 

Shares of Rallis India have declined more than 41% in a year's period whereas the Tata Group chemical stock is down over 32% in 2022 (YTD) so far, and is currently trading its 52-week low level of 182 that it had hit on June 20, 2022 on the BSE.

Rallis India reported a consolidated loss of 14 crore for March 2022 quarter due to multiple challenges, including in seeds business, as compared to profit of 8 crore during January-March 2020-21. The chemical company's consolidated revenue of the company during the quarter under review grew 7.8% to 508 crore from 471 crore in the year-ago period.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint

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