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Fundamental analysis Rallis India Ltd


Fundamental analysis 

Rallis India Ltd is a subsidiary of Tata Chemicals, with its business presence in the Farm Essentials vertical. It is one of India’s leading crop care companies. Rallis is known for its deep understanding of Indian agriculture, sustained contact with farmers, quality agrochemicals, branding and marketing expertise and its strong product portfolio of comprehensive crop care solutions. It is estimated that around 5 Million+ farmers benefit from the agriculture solutions provided by Rallis. SBI MF is the largest non-promoter shareholder with 3.3% shareholding.M.cap of Rallis India is Rs 5,708 cr.
 

Investment rationale
 

Leading player in crop protection business: Rallis has been deeply associated with farmers in India. The company has wide range of product offerings in agro inputs and services and has spread across 80% of India's districts through an extensive distribution network of loyal and supportive dealers and retailers. The business area includes contract manufacturing, seed, plant growth nutrition, and services. Rallis has nearly 7 decades of experience of servicing rural markets with the most comprehensive portfolio of products and solutions.
 

Insecticides & herbicides showing growth: Rallis manufactures Insecticides, Fungicides & Herbicides under the crop care segment with production (total production of 28,166 MT for FY20) contribution of 49%, 25% & 27% respectively. The Indian crop protection market for insecticides was projected to witness a growth of approximately 8% during FY 2019-20. Insecticides remain the most used crop protection chemical with around 55% share followed by fungicides and herbicides contributing 20% and 18% share, respectively, of the crop protection market in India. The demand for agri-inputs is set to rise in the long term due to less penetration, rising labour cost, increased irrigation facility, credit availability and higher farmer income thereby implying strong outlook for company products.
 

Monsoon forecast: The India Meteorological Department (IMD) forecast a normal monsoon at 100 percent of long period average for the country in ongoing season. Company is likely to be benefited from normal to good monsoon session across the country.
 

Quarterly highlight - Q1FY21: Rallis reported 6% topline growth YoY. Flat growth was primarily due to weak sales from seed and international business. Revenue from the seed business grew 2.8% YoY while the same from crop protection was up 10.7% YoY. Higher gross margins (up 230bps YoY) due to increase in the realisation and change in the product mix translated into expansion in operational performance. Better operational performance, higher other income and lower taxes led to bottomline growth of 52.6% YoY.

 

Strong Financials: In last five years company has grown its topline & bottomline at a CAGR of 10.2% & 6% respectively. It has near debt free balance sheet with cash and investment of ~ Rs347 cr. The company has launched four new hybrid seeds, while it received approval for two crop-protection products, expected to be launched in subsequent quarters that should augur well for the revenue boost in long-term perspective. At current price, the stock is trading at 25x on its 1-yr fwd earnings

  • Market Cap:  5,746 Cr.
  • Current Price:  294.95
  • 52 weeks High / Low  324.60 / 125.00
  • Book Value:  72.48
  • Stock P/E: 28.06
  • Dividend Yield: 0.85 %
  • ROCE: 16.31 %
  • ROE: 12.92 %
  • Sales Growth (3Yrs): 10.62 %
  • Listed on BSE and NSE
  • Company Website
  • Face Value:  1.00
  • PEG Ratio: 14.08
  • Promoter holding: 50.09 %
  • Pledged percentage: 0.00 %
  • Debt:  79.68 Cr.
  • Price to Earning: 28.01
  • EPS:  11.11
  • Net profit:  216.17 Cr.
  • Profit growth: 21.59 %
  • Profit growth 7Years: 6.21 %
  • Net profit preceding 12months: 192.06 Cr.
  • Profit growth 3Years: -0.52 %
  • Dividend yield: 0.85 %
  • Debt to equity: 0.06
  • Sales last year:  2,252 Cr.
  • Sales growth: 12.64 %
  • Unpledged promoter holding: 50.09 %
  • Investments:  302.47 Cr.
  • Intrinsic Value:  2,502
Company is virtually debt free.
Company has been maintaining a healthy dividend payout of 28.87%

Compounded Sales Growth
10 Years:10.06%
5 Years:5.32%
3 Years:10.62%
TTM:12.64%
Compounded Profit Growth
10 Years:5.52%
5 Years:1.99%
3 Years:-0.52%
TTM:21.59%
Stock Price CAGR
10 Years:9.06%
5 Years:5.47%
3 Years:6.42%
1 Year:88.89%

Return on Equity
10 Years:17.16%
5 Years:14.63%
3 Years:13.30%
Last Year:12.92%

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