The Tata group company Rallis India came out with very strong Q1, FY17 result showing consolidated net profit of 174.2 Cr which also include the exceptional gain of 158.39 Cr. It indicate that without exceptional gain the profitability was actually 15.81 Cr compared to 46.2 Cr in the year - ago period. The noticeable point is revenue growth to 469.61 Cr from 438.72 Cr in the corresponding period of the previous year. In my point of view, what we should take out of this analysis is that company struggled in the profitability area. Does it mean that we should neglect the company or should be an opportunistic buyer. The answer should be opportunistic buyer and here is the reason.
Rallis India is into Fertilizer
segment and government is putting lot of emphasis to ensure that India should
become Self dependent on Fertilizers production. For the past two years India
suffered major drought and that led Indian farmer down to level of debt
situation and cash became distant dream for them. The current monsoon trend and
prediction is giving confidence to farmer community and next three production
cycle of crops is guaranteed. The flow of cash will in-turn help companies like
Rallis India to improve their factories utilization factor as well as revenue.
It is widely expected that in next few quarter company will improve upon their
operating margin.
The share price post last to last
quarter went down to 150 INR level and currently trending between 210 to 230
Level. It is advisable to use market correction to accumulate share and keep it
as pension fund. In my point of view that Rallis India may offer very good
return if investor keeps the faith. I am also sure that post cleaning of IndianPSU bank, PSU bank will restart lending loans which will also help the companies
to keep rolling as farmers will be buying more.
Disclaimer - Consult your
Financial advisor before investing
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