RALLIS - Rallis India Ltd Share Price

In the earnings call for Q4 and FY 2025, management of Rallis India Limited provided a cautious yet optimistic outlook for the company's future. Dr. Gyanendra Shukla, the Managing Director and CEO, noted several key forward-looking points:

1. Revenue Growth in Crop Care Business: The domestic crop care business achieved revenue growth of 9% year-over-year for FY25, totaling Rs. 1,578 crore. The company aims to consolidate this growth and tackle herbicide market challenges to enhance volume and revenue further in FY26.

2. Seed Business Prospects: The seed business revenue slightly grew to Rs. 418 crore in FY25 from Rs. 416 crore, with an encouraging profit before tax of Rs. 18 crore. Management is focused on improving inventory dynamics and optimizing costs to sustain profitable growth moving forward.

3. Kharif Season Expectations: The outlook for the Kharif season appears positive due to higher water levels (16.5% above last year) and favorable rainfall forecasts, contributing to robust crop prospects. The Indian Meteorological Department anticipates above-normal rainfall, which would support sowing and growth.

4. New Product Launches: Rallis plans to introduce several new products, including the non-selective herbicide 'LAAFA' aimed at filling portfolio gaps in the herbicide market. These launches are expected to help grow market share and improve sales.

5. Financial Performance Targets: The management expects to grow revenue and maintain EBITDA margin amid challenging export conditions influenced by geopolitical tensions. Long-term efforts are focused on enhancing market reach and cost competitiveness.

6. Cash Reserves: As of March 31, 2025, Rallis reported a solid cash balance of Rs. 439 crore, which would support ongoing and future investments in R&D and operational efficiencies.

Overall, Rallis India remains focused on positioning itself for consistent growth while navigating industry challenges, particularly in its export and herbicide sectors.

Here are the major questions and their detailed answers from the Q&A section of the earnings transcript:

1. Question: "If you could just give us a flavor about how [high carry forward inventory] is likely to shape up for the upcoming Kharif season and a similar commentary for the global market?"

Answer: "At a global level, most product inventories are now normal. In India, inventory exists but is manageable. Much of it is anticipated based on a strong season outlook due to commodity prices and a general forecast of normal monsoons."

2. Question: "Could you tell us why there is a dichotomy in terms of pricing for the domestic market and the international markets?"

Answer: "The domestic and export markets operate independently. Our domestic volumes remained flat. Specific issues arose with certain products during Q4, leading to effective pricing challenges. We're addressing these gaps through education and engagement with farmers."

3. Question: "Can you share the breakdown of the Crop Care revenues between domestic and exports?"

Answer: "Total exports in Q4 were around Rs.150 crore, compared to Rs.165 crore last year. The remaining revenue primarily came from the domestic business. Export challenges affected our CSM business, leading to a degrowth."

4. Question: "How should we look at growth in crop care, both on volume as well as on the revenue side?"

Answer: "We aim to grow both volume and price. Our strategy focuses on expanding herbicide categories and addressing gaps within our insecticide and fungicide segments to significantly enhance our domestic business."

5. Question: "How do we see our volumes shaping up in the next year for products like Acephate, Pendimethalin, and Metribuzin?"

Answer: "Acephate is showing a positive outlook while Metribuzin and Pendimethalin remain neutral. Metribuzin is banned in Europe, so we're focusing primarily on the U.S. and domestic markets for the other products."

6. Question: "What is your guidance for FY26 in terms of revenue growth and margins?"

Answer: "We expect our seed and soil health businesses to improve and are optimistic about our new herbicide portfolio. We aim for a growth rate slightly above the industry average of 5-7%. If we can bring innovative products to market, we could see significant traction."

7. Question: "What would our outlook be for CAPEX in FY26?"

Answer: "For FY26, we'd expect CAPEX around Rs.75 crore to Rs.100 crore, focusing primarily on R&D and solar projects, as well as sustaining existing facilities. We aren't planning major new greenfield or brownfield investments."

These selected questions and answers summarize the key concerns and responses discussed in the earnings call, along with relevant figures and outlooks.