Rallis India earnings show resilient crop care and seeds growth amid monsoon volatility

Investment View and Q1FY27 Overview

In its July 28, 2026 result update, ICICI Direct Research retained its BUY view on Rallis India Limited following a decent Q1FY27 performance despite an unusually high base and adverse operating conditions. The broker has set a target price of Rs 265 against a CMP of Rs 220.

Rallis India operates across domestic and export crop care, custom synthesis manufacturing, soil and plant health, and seeds. The company has more than 6,700 dealers, 95,000 retailers and an export presence in over 30 countries. Crop care represented 68 per cent of Q1FY27 revenue, while seeds accounted for 32 per cent.

Q1FY27 Financial Performance

Rallis India reported revenue of Rs 1,022 crore in Q1FY27, up 7 per cent year on year. Gross margin expanded by about 140 basis points to 37.7 per cent. EBITDA grew 23 per cent to Rs 185 crore, with EBITDA margin improving by about 240 basis points to 18.1 per cent. This was supported by crop-care volume growth and fixed-cost optimisation. PAT increased 32 per cent year on year to Rs 125 crore.

Crop care EBITDA rose about 23 per cent to Rs 86 crore, while seed EBITDA increased about 24 per cent to Rs 99 crore.

Crop Care Growth and Herbicide Opportunity

The broker highlights the resilience of the crop-care business despite delayed monsoon and Kharif sowing, heatwave-related labour disruption and geopolitical headwinds. Domestic B2C crop care grew 19 per cent year on year, supported by new launches, while B2B exports declined 16 per cent amid a difficult global environment.

Conference-call commentary indicated that domestic crop-care growth was supported by 15 per cent volume growth, market execution, channel engagement and four new product launches. Herbicides were the largest crop-protection contributor in Q1FY27 and grew about 12 per cent.

Management sees Direct Seeded Rice adoption in North India as a structural opportunity for herbicides. Rallis India has launched new rice herbicides and is participating in herbicide-tolerant Direct Seeded Rice technology through licensing partnerships.

Seeds Business and Crop Outlook

Seeds revenue increased 6 per cent year on year, mainly due to pricing, although cotton volumes remained pressured by lower acreage and illegal HTBT cotton. Rallis India launched products across cotton, paddy, millet and other crops, including cotton hybrids for North India and a herbicide-tolerant Direct Seed Rice product under the Dhaanya brand.

Management expects cotton to remain weak in FY27. However, rice, maize, millet, mustard, chilli and biologicals are expected to partly offset this pressure. Chilli demand is expected to recover meaningfully in Q2FY27 and Q3FY27 as crop economics improve.

Exports, CSM and Working Capital

Export demand remains weak because of subdued European demand, aggressive Chinese pricing and logistics disruptions affecting Pendimethalin, Acephate and Hexaconazole. Management considers the custom synthesis manufacturing, or CSM, business relatively insulated because of contractual arrangements. Shipments to a new US customer began in Q1FY27.

Rallis India is working on three to four additional CSM projects and plans to launch three to four catalogue products over the next three years, although management noted that scaling will be gradual.

Channel inventory has largely normalised, but net working capital increased by around 15 to 20 days year on year as farmer liquidity shifted towards fertiliser purchases. Management remains cautious on sales returns and provisioning because crop progression and liquidation remain uncertain.

Financial Forecasts and Valuation

Management maintained its aspiration for double-digit revenue growth and an EBITDA margin of about 15 per cent over the longer term. ICICI Direct expects the following financial performance:

The broker's target price of Rs 265 is based on 10 times EV/EBITDA applied to FY28E EBITDA of Rs 437.2 crore.

Key Risks

• Adverse and unpredictable weather conditions.
• Export pricing pressure, including aggressive Chinese pricing.
• Destocking in export markets and subdued overseas demand.