Rallis Q1 PAT ₹125 Cr, +32% YoY — but ₹35 Cr provision write-back masks flat underlying
PAT +31.6% YoY · revenue +6.8% · margins flat · miss vs street
₹1,022 Cr
+6.8% YoY
₹125 Cr
+31.6% YoY
12.08%
+2.3pp YoY
₹6.43
Rallis India opened FY27 with standalone revenue of ₹1,022 Cr, up 6.8% YoY (₹957 Cr), and reported net profit of ₹125 Cr versus ₹95 Cr a year ago — a headline +31.6%. That growth, however, is almost entirely a one-off. Note 6 discloses a ₹35 Cr reversal of performance-incentive and retiral provisions (from harmonising salary structures), which cut employee benefits expense to ₹52 Cr from ₹67 Cr YoY and flowed straight to the bottom line; a further ₹2 Cr came from an exceptional land-sale gain. Strip both out and adjusted PAT is roughly ₹97 Cr — essentially flat YoY. Reported NPM of 12.2% (vs 9.9%) is the artefact; underlying margin sits near 9.5%.
Q1 FY-2027 vs prior quarters
The operating story is cost inflation, exactly as management flagged on the Q4 call. Cost of materials consumed jumped 31% YoY to ₹618 Cr against revenue growth of just 6.8%, confirming the 15-25% raw-material inflation guidance. The segment is a single Agri-Inputs business (₹1,012 Cr of the ₹1,022 Cr revenue), so there is no diversification cushion — and with a below-normal monsoon forecast, the Kharif demand that drives Q1 is the swing factor. The ₹35 Cr provision release, not price/volume, is what held margins up this quarter.
The stock went into the print at ₹239.87, up 4.8% over the past month of trading.
For context: this is the highest quarterly PAT in the last 6 quarters on our records; revenue is at a 6-quarter high.
What the summary numbers don't show
Unaudited, unmodified limited review — no consolidated statement (no subsidiaries)
Management guides for potential double-digit revenue growth in FY27, largely driven by price hikes of 5-10% to counter significant 15-25% raw material cost inflation, alongside 'high double-digit' growth in the seeds business. However, overall margins are expected to remain 'stable-to-soft' due to these cost pressures
— This quarter: missed
Against expectations this reads as a miss. Uniresearch had modelled revenue of ~₹1,170 Cr (+22%) and PAT of ~₹142 Cr (+50%); actuals came in at ₹1,022 Cr and ₹125 Cr, short on both lines, and the revenue print undershoots management's own FY27 'double-digit growth' guide in its first quarter. The sequential swing from Q4's ₹15 Cr loss to ₹125 Cr profit is seasonal (Q1 is the peak Kharif quarter) and should not be read as momentum. The board meeting also came amid a run of senior management and independent-director changes in June; the auditor issued an unmodified limited-review conclusion.
What to watch
W1
FY27 revenue vs management's double-digit guide — Q1 at +6.8% needs H2 acceleration from seeds ('high double-digit' guided) and price hikes
W2
Margin once the ₹35 Cr provision reversal drops out — underlying NPM ~9.5% flat while RM cost runs +31% YoY; watch gross margin next quarter
W3
Price-hike pass-through (guided 5-10%) vs 15-25% input inflation, plus below-normal monsoon impact on Kharif Agri-Inputs demand
Standalone only (Note 8: no subsidiary/JV, so no consolidated). Two one-offs flatter the print: (i) Note 6 — ₹35 Cr write-back of employee performance-incentive/retiral provisions, sitting in employee benefits expense (₹52 Cr vs ₹67 Cr YoY), pre-tax and NOT in exceptional items; (ii) ₹2 Cr exceptional gain on land sale. Adjusted for both, PAT ≈ ₹97 Cr, ~flat YoY vs +31.6% reported. Arithmetic clean: 1022+13=1035; 166 PBEIT +2 exceptional=168 PBT; 168−43 tax=125 PAT. QoQ from Q4 loss is Kharif seasonality (Note 3).
Informational and educational content only. Not investment advice.