Difficult quarter for Rallis India, profit declines 31.4% QoQ

No image 5paisa Research Team

Last Updated: 4th April 2022 - 12:44 pm

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Rallis India, a subsidiary of Tata Chemicals, focuses on the Farm essentials vertical. Rallis is one of the top crop care companies in the country and covers more than 80% of India’s districts.

According to the Q2 FY21 results, the company reported a 32.53% YoY decline in consolidated PAT to Rs.564 million from the corresponding quarter, last year; and a 31.4% decline QoQ.

A very small growth of 0.4% was shown in the Revenue, standing at Rs.7278 million from Rs.7250 million in Q2 FY21. The EBITDA Margin fell by 420bps, from 16.1% to 12.1% which indicates that Rallis is not able to pass on the increasing costs it is facing to its customers by proportionately increasing the prices. The employee costs and other expenses have shown an increase of 13.8% and 8.4% YoY, respectively.

The shortcomings in the report can be mainly attributed to the fact that the un-seasonal and late monsoons this year, destroyed crop quality and was also not in the least favorable to agri input companies in this quarter. The seed business saw a sharp decline of 65% due to the changing patterns of cropping all over the country. The raw material problems are proving to be an additional burden on the company and preventing optimum operational efficiency and growth.

Looking on the positive side, during this September ending quarter, the company has launched three new products under the heads- crop protection and crop nutrition. Also, the Ankleshwar project of debottlenecking for two A.Is was commissioned.

After the Q2 results were announced, the share price of the company dipped sharply by 7.12% on the National Stock Exchange. It opened at Rs.287 which is at a high discount to its closing price on 19th October i.e. Rs.304.

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