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Why Rallis India Share Price is Rising

Mar 8, 2024

Why Rallis India Share Price is Rising

Since the release of the speculative report on Tata group's upcoming IPOs, market participants have finally found something to cheer for.

It has got them thinking things differently and many are already pinning hopes to a potential Tata Technologies listing kind of excitement.

What do you expect? I would be shocked if the next Tata Group company to come out with an IPO would make a lacklustre debut.

Today, we continue our series of articles on Tata group stocks in recent days.

In case you haven't checked them out, you can do so here.

Coming back to Rallis India...

Shares of the company have seen a sharp uptick in recent sessions owing to the buzz surrounding Tata Sons IPO.

Let's find out how the potential IPO news affect Rallis India.

Why Rallis Share Price is Rising

# Potential Tata Sons IPO Buzz

The primary reason Rallis India shares have gone up in recent trading sessions is owing to the buzz over the potential listing of Tata Sons.

Tata Chemicals holds nearly 55% stake in Rallis India.

Now Tata Sons, which is the holding company of the Rs 30 trillion (tn) conglomerate, is majorly owned by Dorabji Tata Trust (28%) and Ratan Tata Trust (24%).

Tata Motors and Tata Chemicals own about 3% stake each in the holding company, while Tata Power owns 2% and Indian Hotels 1%.

Tata Chemicals ownership in Tata Sons amounts to nearly 80% of the company's overall market capitalisation.

According to calculations, Tata Sons could be valued at somewhere around Rs 8 tn to Rs 11 tn. Assuming a holding company discount of around 60%, the value is likely to be Rs 6.4 tn.

This implies that the 3% stake held by Tata Chemicals would be around Rs 198.5 bn, which is as much as two-thirds of Tata Chemicals' market capitalisation of Rs 335 bn as of Thursday's close.

What Next for Rallis India?

Rallis India has received a major boost from the potential IPO talks.

The company recently posted subdued Q3 earnings due to a 6% rain deficit in India and declining prices of various generic active ingredients.

The company's exports declined 26% during the quarter, with demand remaining muted across key markets.

Rallis India is anticipating ongoing challenges to continue in the near term, especially in the exports business.

However, the company expects margins to improve in the medium term. In the first nine months of FY24, the company has introduced 16 new products across various categories and markets.

Being a major player in the crop protection sector with presence across all three segments of the pesticide industry gives Rallis India an edge over its competitors.

Financial Snapshot

Rs m, standalone FY19 FY20 FY21 FY22 FY23
Net Sales 19,836 22,515 24,294 26,039 29,670
Growth (%) 32% 14% 8% 7% 14%
Operating Profit 2,727 2,991 3,650 3,035 2,326
OPM (%) 14% 13% 15% 12% 8%
Net Profit 1,542 1,855 2,287 1,643 919
Net Margin (%) 8% 8% 9% 6% 3%
ROE (%) 12.5 13.8 15.2 10.0 5.4
ROCE (%) 17.7 17.6 20.0 13.5 7.9
Dividend (Rs) 2.5 2.5 3.0 3.0 2.5
Debt to Equity (x) 0.1 0.1 0.0 0.0 0.1
Data Source: Ace Equity

Rallis also gets support from its promoter Tata Chemicals. Rallis is also strategically important as it is the only company in the group catering to the agrochemical space.

In the September 2023 quarter, Tata Chemicals upped its stake in the company to 55.1%.

To know more, check out Rallis India's detailed shareholding here.

How Rallis India Share Price has Performed Recently

In the past five trading sessions, Rallis India share price has surged around 15%.

Over the year gone by, shares are up 41%.

Most of the gains came in yesterday's trading session after investors factored value unlocking prospects, same way they've been doing for Tata Chemicals.

Rallis has a 52-week high of Rs 294 touched on 7 March 2024 and a 52-week low of Rs 186 touched on 22 May 2023.


Here's a table comparing Rallis India with its listed peers.

Comparative Analysis

Company Rallis India Bayer Crop Insecticides Sharda Cropchem Sumitomo Chemicals
ROE (%) 5.4 29.1 7.1 17.4 23.4
ROCE (%) 7.9 38.7 9.8 22.8 30.7
Latest EPS (Rs) 5.1 178.7 22.1 18.3 6.7
TTM PE (x) 56.1 30.6 23.5 19.3 54.1
TTM Price to book (x) 3.1 7.6 1.5 1.7 6.9
Dividend yield (%) 0.9 2.4 0.6 1.7 0.3
Industry PE 34.4
Industry PB 4.8
Data Source: Ace Equity

About Rallis India

Rallis India is a subsidiary of Tata Chemicals and a part of the Tata Group.

It is one of India's leading agro sciences companies, with more than 160 years of experience servicing rural markets, with the most comprehensive portfolio of products/solutions for Indian farmers.

Rallis is known for its deep understanding of Indian agriculture, sustained contact with farmers, quality agrochemicals, branding & marketing expertise along with its strong product portfolio.

It is also present across the agricultural input value chain and manufactures seeds and organic plant growth nutrients.

The company has partnered with global corporations in the crop protection segment. It does contract manufacturing for them in its four state-of-the-art manufacturing facilities located across India.

For more details, see the Rallis India company fact sheet and quarterly results.

You can also compare Rallis India with its peers:

Rallis India vs Bayer Cropscience

Rallis India vs Sumitomo Chemical India

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

Yash Vora

Yash Vora is a financial writer with the Microcap Millionaires team at Equitymaster. He has followed the stock markets right from his early college days. So, Yash has a keen eye for the big market movers. His clear and crisp writeups offer sharp insights on market moving stocks, fund flows, economic data and IPOs. When not looking at stocks, Yash loves a game of table tennis or chess.

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