Angel Broking neutral on Rallis India

"For 1QFY2014, Rallis India (RAIL)'s consolidated net sales grew by 20.0 percent yoy to Rs 409cr. The OPM for the quarter stood at 12.9 percent, i.e an expansion from 11.0 percent in 1QFY2013. The yoy expansion in the OPM resulted in a 22.8 percent yoy rise in the company's adjusted net profit to Rs 35cr. Going forward, we expect RAIL to register a CAGR of 14.8 percent and 12.4 percent in net sales and profit respectively, over FY2013-15."

"RAIL's revenue for the quarter grew by 20.0 percent yoy to Rs 409cr. On the operating front, the gross margin came in at 48.3 percent, up 3.1 percent. The OPM expanded to 12.9 percent in 1QFY2014 vs 11.0 percent in 1QFY2013. This resulted in a growth in the adjusted net profit by 22.8 percent yoy to Rs 35cr."

Outlook and valuation: "The Management is confident about the long-term prospects of the agrochemicals industry. We expect RAIL to register a CAGR of 14.8 percent and 12.4 percent in net sales and profit respectively, over FY2013-15. At the current levels, the stock is trading at a fair valuation of 20.0x FY2015E EPS. Hence, we maintain our Neutral recommendation on the stock," says Angel Broking research report.

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