Jhunjhunwala, FPIs, MFs hike stake in Rallis India; stock up 32% in 2020

Ace investor Rakesh Jhunjhunwala and institutional investors hiked their respective stake in Rallis India during the January-March 2020 quarter (Q4FY20).

Institutional investors, led by mutual funds and foreign portfolio investors (FPIs), bought an additional 2.8 million equity shares, or 1.45 per cent stake of Rallis India, in Q4FY20. Mutual funds' holding in the company increased to 15.01 per cent from 13.6 per cent, while FPIs' holding increased to 4.89 per cent from 4.41 per cent at the end of December 2019 quarter.

Rakesh Radheshyam Jhunjhunwala acquired an additional 275,000 shares of Rallis India during the quarter, taking his stake in the company to almost 10 per cent mark. Jhunjhunwala held 9.93 per cent stake in the company in March quarter as against 9.79 per cent in the previous quarter, the shareholding pattern data shows.

Rallis India's stock was up 4 per cent at Rs 223 on the BSE on Monday in an otherwise weak market ahead of its financial results announcement for Q4FY20 on Tuesday. In comparison, The S&P BSE Sensex was down 5.7 per cent or 1,907 points at 31,811 at 02:17 pm.

Thus far in the calendar year 2020, the stock has outperformed the market by surging 32 per cent, against 23 per cent fall in the benchmark index.

In the October-December quarter (Q3FY20), Rallis India had reported a strong 146 per cent year on year (YoY) jump in consolidated profit before tax (before exceptional items) at Rs 48 crore, against Rs 20 crore in previous year quarter.  Consolidated revenues during the quarter jumped 28 per cent at Rs 534 crore on a YoY basis.

For Q4FY20, Kotak Institutional Equities expects Rallis India to post 12 per cent YoY growth in revenues amid continue growth from a robust Rabi season, which will be partly offset by disruption in logistics and shutdown of operations in March-end 2020. The brokerage firm expects the company's EBITDA (earnings before interest, taxes, depreciation, and amortization) margins to decline by 40 bps YoY to 5.2 per cent due to modestly higher raw material cost amid higher prices for certain inputs.

“Rallis is expected to grow sales/EBITDA/PAT by 18.0/273.0/758.4 per cent YoY to Rs 400 crore/Rs 25.4 crore/Rs 13 crore respectively. Rallis’ capacity expansion in Metribuzin bodes well for the company in the near term; consequently the international business is expected to out-grow the domestic business. We believe both the domestic and international business to perform well to support Rallis’ an otherwise weak quarter seasonally,” analysts at Dolat Capital said in earnings preview Q4FY20.