Billionaire investor Rakesh Jhunjhunwala-backed agrochemical stock – Rallis India Limited likely to surge by 23 per cent from the current level, domestic brokerage Prabhudas Lilladher stated while upgrading to Buy rating from Hold as the company takes price hike to mitigate higher input costs.
According to brokerage, management of Rallis India stated that recent correction in Raw Material prices coupled with high-cost inventory will exert pressures on the first half of FY23 margins. However, 4-5 per cent price hikes will help to partially mitigate the same, it further said.
Rallis India in its first ever pre-quarterly conference call highlighted that domestic crop care and seeds segment will likely post stable performance in Q1FY23, placements have progressed as per plan and liquidation will take place in subsequent quarters, Prabhudas Lilladher pointed out.
The concall also highlighted delayed monsoons do have an impact in terms of placements and liquidation, while some crop shift patterns are visible in cotton and paddy crops; as well as exports will likely grow better than other segments and pressure on margins likely to persist in near term.
The brokerage expects revenue/PAT CAGR of 10/4 per cent over FY22-24E (vs 8%/3% over FY11-22), while it trims FY23/24E EPS estimates by 16/15 per cent citing pressure on near term margins.
Rakesh Jhunjhunwala, who is also called as the Big Bull of the Indian stock market, holds 19,068,320 equity shares, which comprises 9.8 per cent stake in Rallis India, as per the March 2022 shareholding pattern available of the company available on the BSE.
Rakesh Jhunjhunwala and Associates publicly holds 33 stocks with a net worth of over Rs 25,446.1 crore as of July 2, 2022, as per the stock analysis website trendlyne.com.
The stock on Friday closed nearly 1 per cent lower to Rs 187.6 per share on the BSE as compared to 0.21 per cent fall in the S&P BSE Sensex. In the last six months, the stock has underperformed the markets by falling over 32 per cent as against nearly 11 per cent dip in the benchmark index.