Rallis India shares plunge 8% after Q3 net profit declines 54%

Shares of Rallis India Ltd faced significant selling pressure on Monday, January 20, plunging over 8% in morning trade following its third quarter earnings report.

The company reported a 54.2% year-on-year decline in net profit to ₹11 crore, significantly lower than the market expectations. Revenue from operations also fell 12.7% to ₹522 crore, highlighting a challenging quarter for the agrochemical manufacturer.

The stock opened lower at ₹271.05 apiece on the BSE, marking a 6.5% drop from its previous closing price of ₹289.75 apiece. It further declined to an intraday low of ₹266.20 apiece, an 8% decline from Friday’s close.

However, the stock recovered some of it early losses to trade 6.83% lower at ₹269.95 apiece, on the BSE at 10:26 am. The stock is trading almost 40% lower from its 52-week high of ₹378.4 apiece on the BSE.

On the operational front, the company’s earnings before interest tax depreciation and amortisation (EBITDA) fell 29% from the previous year to ₹44 crore, with margin shrinking to 8.4% from 10.4% in the corresponding quarter of the previous fiscal. The drop in profitability reflects weak export performance, although the domestic market managed to improve margin through pricing strategies and cost management.

Investors reacted negatively to the subdued financial performance, reflecting concerns over declining revenues, squeezed margins and export challenges.

The results, announced post-market hours on Friday, also cast doubt on the company's near-term recovery prospects, with overall EBITDA for the nine-month period showing a 22% decline.

In the third quarter, Rallis India reported a 13% decline in crop care revenue and a 7% reduction in seeds revenue compared to the third quarter in FY24. Weak export demand contributed to flat revenue growth for the first nine months of the fiscal year.

Export volumes fell by 34%, accompanied by a 4% decline in pricing, leading to a significant 38% drop in revenue from the export business.

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