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Rallis India acquires stake in seed company
Rallis India has announced the acquisition of 53.5% stake in Metahelix Life Science (MHS),
a Bangalore-based seed company. The total acquisition cost is `99.5cr and is funded
through internal cash. Rallis would further infuse `25cr and increase its stake to 59.02%,
which would be increased to 100% over a five-year period. MHS is expected to generate
revenue of `60cr and `100cr in FY2011 and FY2012, with negligible bottom-line
contribution. Management has guided for revenue of over `1,000cr cumulatively over a
five-year period. At the current price of `1,283, the stock is trading at 19x and 14x its
FY2011 and FY2012 EPS. We maintain our Neutral rating on the stock.
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