Kotak Institutional Equities has given a sell recommendation on Bayer Cropscience with a fair value of Rs 2,700. Shares of Bayer Cropscience traded at Rs 3,154.15 around 1 pm on 24 July, 2019. The brokerage has set a one-year horizon for the stock to hit the target price. Rationale behind the ‘sell’ call: Weak performance, yet again Bayer began FY20 with 20 per cent decline in revenues and 46-48 per cent decline in Ebitda and net income (adjusted EPS of Rs 22.5) reflecting deferment of product placement amid a delayed monsoon. Bayer’s sustained weaker performance compared to peers in domestic business raises concerns on realizable gains from the perceived superiority of its product portfolio. “We cut FY2020-21E EPS by 12-13 per cent and reiterate sell with reduced DCF-based FV of Rs 2,700 (Rs 3,000 previously),” said the brokerage. 20-46 per cent decline in revenues and in Ebitda during Q1FY20 amid delayed monsoon Bayer reported a steep 20 per cent year-on-year (YoY) decline in revenues to Rs 660 crore, underperforming domestic peers, with Ebitda plunging 46 per cent YoY to Rs 120 crore in Q1FY20. Gross margins declined nearly 340 bps YoY to 49.2 per cent amid higher RM costs; Ebitda… Read full this story
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