Rallis India stock may give investors 40% returns in one year

Fertilisers are important for maximizing yields and fertility and have always played a key role in the success of India’s agricultural revolution and self-reliance in grain production. India is the world’s second largest consumer of fertilisers where crop protection chemicals play a major role in increasing agriculture productivity as they help in minimising plant diseases, weeds, and other pests that damage agriculture crops, thus increasing and maintaining crop yield. India is also the fourth largest producer of agrochemicals, after US, Japan and China. Crop protection comprises of insecticides, fungicides, herbicides and bio-pesticides. India’s pesticides consumption is currently one of the lowest in the world and opportunities for the Indian market are increasing with China shutting down capacities. Agriculture inputs play a decisive role in enhancing crop production and with arable land declining, production of crops can only be increased by using quality inputs. Concerted efforts are being taken by the Indian farmer to transform agriculture methods, improve farm productivity and achieve food security. The global seed market is expanding as demand for food will grow in the backdrop of increasing world population anticipated to reach 10 billion by the year 2050. One of the major trends which has influenced the seed market worldwide is the significant shift in farming practices. Farmers are increasingly buying commercially-produced enhanced seed varieties, as against using seeds from the last harvest due to advantages of higher yield, improved nutritional quality, reduced crop damage and better disease resistance. India has a vibrant seed market with an estimated US$ 2.5 billion value with heightened support from the government and rapid advancements in seed technology. This has strengthened the Indian seed industry in the areas of Research & Development, product development, supply chain management and quality assurance. Growing food grain production and increasing government investment in agriculture are augmenting demand for seeds in the country and this is compounded by rising disposable incomes, commercialization of agriculture and growing awareness among farmers regarding the use of certified seeds. Irrigation is an area of major concern globally driven by depleting water levels and uneven rainfall due to climate change. With about 20% of global agricultural area irrigated, there is a growing demand for mechanized irrigation systems that can address farm water needs. In India too, where less than half of the net sown area is irrigated, the need for special irrigation solutions is imminent and a prime focus for the Government. Rallis India Ltd is a Tata Enterprises group company patented by Tata Chemicals in the crop protection business. It has a long iconic history and one of the pioneers in the agricultural industry. The Q2 FY2022 financial results were not that great on the back of erratic monsoon distribution, raw material shortage from China, container shortage and availability along with increased proliferation of BT cotton. The Rallis stock is in bear market territory and currently quoting at Rs 275 on the Indian stock exchanges. The company is investing in a new Formulation plant in Gujarat for future growth and Analysts expect the margins and bottom line to improve significantly in the next one year. Rallis India stock currently hovering at Rs 275 can be accumulated by patient portfolio investors in staggered smaller lots over the next 3 weeks for solid 40% gains over the next one year time frame.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.