Mid Cap Stock Analysis - Rallis India

Rallis is in some areas which have been very popular like seeds, agrochemicals, fertilisers, contract services to people like Bayer, Syngenta, Cheminova.

Recently Rallis has entered into new contracts with the MNC companies. The project at Dahej where they are planning a capex and could possibly be on stream by July 2010.

Given the high probability of a normal monsoon in the current year, the management expects the industry to witness a healthy growth of 10-12% in FY2011E. Rallis India is a major player in the Domestic market; thus, the company is expected to grow at a higher pace than the industry. Additionally, Rallis India’s Exports are estimated to receive a major leg-up once its new plant at Dahej comes on stream.

However, as the Dahej plant ramps up and the contribution from exports starts increasing, Rallis’s margins could witness some pressure, as exports have a lower margin vis-a-vis domestic sales.

Market Cap 1905.8
* EPS (TTM) 77.94
* P/E 18.86
* P/C 16.39
* Book Value 279.76
* Price/Book 5.25
Div(%) 160.00%
* Div Yield(%) 1.09
Market Lot 1.00
Face Value 10.00
Industry P/E 16.25

Overall, Rallis India could register a CAGR of 18% and 36% in Net Sales and Profit over FY2010-12E, respectively. At the current level, the stock trades at 13.7x and 10.7x its FY2011E and FY2012E earnings, respectively.

Given the fact and of course with the business model, the market share, the presence of its products and the focus as far as the agri business goes going forward and if monsoon is going to be somewhere around 98% or about that, definitely there is going to be tremendous demand.

So from that point of view, a stock market investment research team of a leading broker has recommended to buy stocks with a price target of around about 1752. This could be around about 6 months to 12 months.