Rallis India hits 32-month high; soars 14% on favourable volume outlook

Rallis India hits 32-month high; soars 14% on favourable volume outlook

Deepak Korgaonkar 

Shares of Rallis India hit a 32-month high of Rs 320.95 as they soared 14 per cent on the BSE in Monday's intraday trade, aided by heavy volumes, on favourable growth outlook. Rallis India is a subsidiary of Tata Chemicals and a part of the Tata Group.

The stock was trading at its highest level since October 2021. It had hit a record high of Rs 362 on June 18, 2021. At 11:57 AM, Rallis India was trading 12 per cent higher at Rs 316.95 as compared to 0.11 per cent rise in the BSE Sensex. Average trading volume on the counter jumped nearly five-fold today with a combined 8.1 million equity shares changing hands on the NSE and BSE.

La Nina (associated with good rainfall in India) may set in during the Kharif season, which may drive healthy volume growth in crop care business. The company's outlook for the Indian agriculture industry is optimistic, and it is committed to adapting to the evolving market. The company's portfolio of Crop Protection, Crop Nutrition, and Improved Seeds supported by wide market reach, aims to address the emerging needs of the Indian farming community.

India is a leading exporter of agrochemicals and the business environment is conducive for rapid export growth going forward. The Government and the Industry are working together to tap the opportunities to make India a global hub for agrochemicals.

"Government policies are focused on transforming the agriculture value chain for increasing farmer income for balanced economic growth and also address the emerging challenges in agriculture. Value chain partners like Rallis has an important role to play in transforming agriculture activities and Rallis has been strengthening its core to tap the emerging markets opportunities," the company had said in its FY24 annual report.

Meanwhile, in the March quarter (Q4FY24), low reservoir levels and heat waves in the southern region impacted overall demand. However, northern and western regions saw good momentum. The outlook is positive with the news around La Nina. The management is expecting good rains.

"Export business continues to witness low prices and poor demand, as channel destocking continues across the globe. Commentary from many global players also indicates that getting back to normal demand level may take longer than originally anticipated," Rallis India had said in Q4FY24 earnings conference call.

That said, Rallis India has turned around its seeds business in FY24 led by good offtake of new cotton hybrids (Aatish Express and Diggaz brands), and cost optimisation measures. Rallies plans to ramp up Diggaz volume in FY25. It also has the opportunity to scale up business in paddy, maize and millet.

Amidst industry-wide challenges as regards cotton/maize seed production, the management expects Rallies to clock in healthy growth led by volume as also marginally better realization. With slow-moving hybrid portfolios being shed out of the system, margin may expand, according to analysts at Elara Capital.