Rallis reports Q4 resultsRALLIS - 216 Change: 4.25 (2.01 %)
News: Rallis reported revenue growth of 7.7% YoY to Rs 507.5 crore against our estimate of Rs 540.9 crore. The domestic crop care segment recorded growth of 25% YoY to Rs 268 crore, while the same from international crop care fell 8% YoY to Rs 213 crore. The revenue from seeds was at Rs 26 crore. Higher COGS (+20% YoY) dented operational growth, which remained in loss of Rs 2.8 crore against a profit of Rs 17.7 crore in Q4FY21. Subdued operational performance led bottomline to report a loss of Rs 14.1 crore against profit of Rs 6.9 crore in Q4FY21.
Views: Lower-than-expected numbers are largely on account of two factors (i) lower than estimated sales from international market due to shortage of RM for one of the key molecule (ii) higher than estimated COGS. We believe first factor is transitory and growth can get normalised ahead. However, lost sales during last quarter cannot come due to seasonal factor. In terms of RMAT inflation, the company is able to pass on input inflation, which led domestic crop care to grow at 25% (note: Q4 is normally lean season for domestic crop care so growth should be largely price led). We expect it to take around two to three quarters to get normalised gross margins, going ahead (GPM for FY22: 37.6% vs. 39.3% in FY21). Rallis imports around 40% of their COGS. Majority of this comes from China.