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Valuation target reached 18 on this share of Tata, the decline will continue

Rallis India Share Price : Tata Group is a private business group. Tata Group Edelweiss Broking has reduced its rating from hold to Tata Group’s stock Rallis India Limited. Let us tell you that it has been kept in the downgrade rating. According to Edelweiss Broking, this chemical company is expected to perform less than its competitor going forward. Rallis India Shares of Rallis India closed down .28% at Rs 194.10. Let us tell you that this year it has broken up to 30% in YTD so far.

Brokerage opinion
Edelweiss Broking said that Rallis’ underperformance is a concern compared to its competitor. The company’s return on capital employed fell 900 basis points to 13.4% in FY17-22. Edelweiss said Rallis is heavily dependent on China for key inputs and margins will continue to be under pressure for the company. The brokerage has cut its FY23 EPS estimate by 12% and for FY24 by 14% due to poor visibility of earnings recovery. Along with this, its valuation target has been reduced from 22 times to 18 times.

Margins are under pressure
Another brokerage Prabhudas Lilladher had cut its FY23 and FY24 EPS estimates by 15-16%, citing pressure on near-term margins. The brokerage had lowered its target on the stock from Rs 260 to Rs 230, based on 18 times EPS of FY24, but upgraded the stock from ‘hold’ to ‘buy’. The same veteran investor Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala hold about 9.8% stake in this company, which is worth Rs 371.9 crore.

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