Lost money in Rallis India post Q4 earnings? Here's what you should do

Rallis India stock tanked up to 10 per cent on Friday after the firm announced its earnings for the quarter ended March 2022. The arm of Tata Chemicals reported a 274 per cent fall in net profit in Q4. The company announced a consolidated loss of Rs 14 crore for the March quarter due to multiple challenges, including in seeds business.

Rallis India had posted a consolidated profit after tax of Rs 8 crore during the corresponding quarter of the previous financial year.

Sales rose 7.70 per cent to Rs 507.54 crore in the quarter ended March 2022 against Rs 471.26 crore during the previous quarter ended March 2021.

In the last fiscal, net profit declined 28.17 per cent to Rs 164.20 crore as against Rs 228.58 crore during the previous fiscal ended March 2021.

However, sales climbed 7.18 per cent to Rs 2603.93 crore in the last fiscal as against Rs 2429.44 crore during the previous year ended March 2021.

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The company's board of directors recommended a dividend of Rs 3 per share, or 300 per cent, for the financial year 2021-22 (April-March) subject to the approval of the shareholders at the ensuing 74th Annual General Meeting of the company.

With Q4 and fiscal earnings remaining below street expectations, Rallis India stock closed over 9 per cent lower on Friday.

The stock opened with a loss of 7.15 per cent in the last trading session.

It stands higher than 50 day moving averages but lower than 5 day, 20 day, 100 day and 200 day moving averages

The stock has lost 10 percent in a year and fallen 7.37 percent in 2022.

On Friday, 1.15 lakh shares of the firm changed hands amounting to a turnover of Rs 2.97 crore.

Market cap of the firm fell to Rs 4,936 crore  on BSE. The stock ended 9.69 percent or Rs 27 lower at Rs 253.85 in a weak market.

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Indian market snapped two sessions of gaining streak on April 22, dragged down by financial majors such as SBI and Axis Bank amid weak global cues. Sensex tanked 714 points to end at 57,197 and Nifty fell 220 points to close at 17,171.

With sentiment in Rallis India turning weak after Q4 earnings, here's a look at what experts and brokerages said about the prospects of the stock in the upcoming trading sessions.

AR Ramachandran, Co-founder & Trainer, Tips2Trades said, "Disappointing Q4FY22 results coupled with weak market sentiment led to Rallis India stock price tanking by almost 9% on Friday. Technically, the stock looks very weak and Rs 220- Rs 230 support looks likely to be tested in the coming week."

Jitendra Upadhyay,  Sr Equity Research Analyst at Bonanza Portfolio said, "Rallis India's  domestic crop protection business grew 14% yoy and export by 6.2% in FY22. However, Rallis India was not able to benefit from huge volume growth. Expanded Metribuzin capacity, backward integration and new product launches are likely to start contributing from FY23E onwards, leading to healthy volume growth. We would like to give a HOLD recommendation on the stock."

ICICI Direct has given a reduce call on Rallis India post the firm's Q4 earnings. The rating of the stock has been revised downward from HOLD to REDUCE on the back of input cost inflation pressure.

"We value Rallis India at 19x P/E FY24E EPS to arrive at a revised target price of Rs 235 per share (earlier Rs 305 per share)," said the brokerage.

Prabhudas Lilladher has given a hold call on the stock with a target of Rs 260.

"We believe headwinds related to supply chain and availability of certain intermediates will likely continue in subsequent quarters. Though Rallis India took price hikes in the recent past, however, it was not sufficient to mitigate entire cost inflation, hence more such hikes are possible in the near term too. Citing above reasons, we trim our estimates for FY23/24 by 8%/4% respectively. We expect Rallis India to clock revenue/PAT CAGR of 11%/9% over FY21-FY24E, led by domestic market share gain and export ramp-up. We maintain a HOLD rating on the stock with a revised target of Rs 260 based on 18xFY24 earnings per share," the brokerage said.