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Rallis India
RECO : BUY TP : Rs1,800
Investment Rationale
§ Rallis is the 2nd largest domestic generic player in extremely regulated market of crop protection and enjoys the
benefit of its well diversified distribution network and age old brand of Tata
§ Its multi pronged strategy to boost revenues through product restructuring, new product launches and focus on
exploring export opportunities and entry into seeds segment along with new initiatives taken like trading of pulses
should help Rallis to post strong revenue growth of 20-25% p.a.
§ Well positioned to tap opportunities in fast growing CRAMS space through its new upcoming facility at Dahej.
Rallis has contracted with leading global players to provide its services under toll manufacturing agreement
§ Growing share of high value branded products, cost reduction initiatives taken by the company and recent fall in
commodities prices is expected to drive its EBITDA margins by 570 bps to 22.2% by FY13E (over FY10)
Valuations
§ At EPS CAGR of 34% (FY10-13E), Rallis offers PEG of 0.4. EBITDA margin expansion of 570 bps over FY10-
13E to improve RoE by 480 bps to 31% by FY13E. With a healthy balance sheet (negative net debt / equity of
0.1) in FY11, Rallis offers attractive investment opportunity. The company also has ‘hidden assets’ like excess
land bank and a minority stake in Advinus, one of the finest pharma research organizations in India
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Rallis India
RECO : BUY TP : Rs1,800
Investment Rationale
§ Rallis is the 2nd largest domestic generic player in extremely regulated market of crop protection and enjoys the
benefit of its well diversified distribution network and age old brand of Tata
§ Its multi pronged strategy to boost revenues through product restructuring, new product launches and focus on
exploring export opportunities and entry into seeds segment along with new initiatives taken like trading of pulses
should help Rallis to post strong revenue growth of 20-25% p.a.
§ Well positioned to tap opportunities in fast growing CRAMS space through its new upcoming facility at Dahej.
Rallis has contracted with leading global players to provide its services under toll manufacturing agreement
§ Growing share of high value branded products, cost reduction initiatives taken by the company and recent fall in
commodities prices is expected to drive its EBITDA margins by 570 bps to 22.2% by FY13E (over FY10)
Valuations
§ At EPS CAGR of 34% (FY10-13E), Rallis offers PEG of 0.4. EBITDA margin expansion of 570 bps over FY10-
13E to improve RoE by 480 bps to 31% by FY13E. With a healthy balance sheet (negative net debt / equity of
0.1) in FY11, Rallis offers attractive investment opportunity. The company also has ‘hidden assets’ like excess
land bank and a minority stake in Advinus, one of the finest pharma research organizations in India
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