Rallis India dips 6% on disappointing Q3 results as PAT falls 13% YoY

The drag in the bottomline performance was largely on account of higher depreciation owing to recently commissioned capacity along with lower other income.

agrochemical — Even after a 23 per cent rise in shares of the company over the past month, analysts maintain their positive stance and see further upside.

2 min read Last Updated : Jan 21 2022 | 12:42 AM IST

Shares of Rallis India dipped 6 per cent to Rs 275.55 on the BSE in Thursday’s intra-day trade after the company reported a 13.3 per cent year-on-year (YoY) fall in its profit after tax (after exceptional items) at Rs 40 crore in December quarter (Q3FY22). The Tata Group company had posted a net profit of Rs 46 crore in Q3FY21.

The drag in the bottomline performance was largely on account of higher depreciation owing to recently commissioned capacity along with lower other income (down 28 per cent YoY). The agrochemicals company reported revenue growth of 10.1 per cent YoY to Rs 628.1 crore, led by international business growth of 19 per cent YoY. Operating profit margin (OPM) improved 20 bps YoY to 10.7 per cent.

The management said the erratic monsoon season this year has not favoured agri input companies as excessive rainfall continued into Q3 in the southern states. Despite these challenges, domestic crop care business grew at 9.4 per cent and exports by 19 per cent during the quarter.

The seeds industry continued to face headwinds due to restrictions for sale of paddy and maize hybrids in some states. The supply chain challenges continued into Q3 with availability being a challenge for certain intermediates as well as steep inflation in prices, the management said.

In spite of multiple disruptions and challenges, the company has faced during the quarter, long term strategy remains on track. The raw material availability and costs continue to be challenging. The elect commodity prices are good and export demand for crop protection is also favourable. Overall Rabi sown area in India remains stable, the company said in a press release.

“The company has been working on backward integration of few molecules along with increasing capacity for few active ingredients to cater to international market. This would eventually translate into better financial performance ahead. Apart from this, diversifying into Rabi focused portfolio over the time could improve growth outlook in long run,” said brokerage ICICI Securities in a note.