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Invest in Rallis India & Accumulate During Market Correction - Long Term Play

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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About Devendra Prasad

20 years plus industry veteran of domestic and international ICT domain with the expertise in Business, Technology, Strategy and Analysis. Specializes in forecasting impact analysis, trends and recommendations for Investments, Technology and Regulations.
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