Rakesh Jhunjhunwala Stock: Brokerage bullish on this Tata Group firm shares despite below estimate Q1 results – here’s why

Rakesh Jhunjhunwala Stock: Despite below estimate first-quarter earnings in fiscal 2022-23, Prabhudas Lilladher, a domestic brokerage firm, is bullish on this Rakesh Jhunjhunwala-backed Tata Group company stock – Rallis India on the back of strong management commentary during the June-end quarter.

The management remained hopeful of good monsoons however remained cautious on high channel inventory amid a falling raw material cost scenario, going forward, the brokerage said.

It added, that the export business with enhanced capacities coupled with favorable base and robust demand is likely to support growth in the near term, in management’s view.

Hence, Prabhudas Lilladher largely keeps estimates unchanged for FY23/24E and expects the company to clock revenue/PAT CAGR of 14/22 per cent over FY22-FY24E, respectively, led by domestic market share gain and export ramp-up.

The brokerage maintains a Buy rating on the stock with an unchanged target price of Rs 230 per share (7% upside) based on 18xFY24 EPS.

Billionaire investor Rakesh Jhunjhunwala has 19,068,320 equity shares, comprising nearly 10 per cent stakes in Rallis India, as per the latest shareholding pattern of the company on the BSE.

Rakesh Jhunjhunwala, who is also called as the Big Bull of the Indian stock market, along with his wife and associates publicly holds 32 stocks with a net worth of over Rs 29,748.8 crore as of July 24, 2022, as per the stock analysis website trendlyne.com.

Key highlights of Q1 earnings:

(a) Domestic revenue grew 17% YoY led by both price and volume growth of 11%/6% YoY respectively, while the crop care segment was up 27% YoY (+17%/+10% price and volume growth respectively).

(b) Export revenues were up 51% YoY (+25%/26% in terms of price and volumes).

(c) Seeds revenue remained flat YoY, Rs 130 mn provisions included in 1QFY23.

(d) Pressure on margins continues leading to EBITDA decline of 7% YoY.

(e) Launched 1 new herbicide each in cotton and paddy: with 3 new paddy hybrids and 1 tomato hybrid in seeds segment during 1QFY23 and

(f) CRAMS gaining traction; PEKK to revive by end of FY23.