Why Rallis India Share Price is Rising

The 2024 election brought significant shifts in various sectors, especially impacting companies associated with key political figures. Notably, stocks influenced by figures like Chandrababu Naidu have witnessed notable movements.

Beyond individual influences, market dynamics have also been influenced by policy expectations, contributing to recent rallies in select sectors.

One such standout is the Tata group stock - Rallis India. Yesterday company's share price soared by a remarkable 11% in a single trading day, contributing to a staggering 22.8% surge over the past five days.

As policy-related stocks gain traction, Rallis India emerged as a significant beneficiary, given its positioning within critical sectors primed for growth.

Delving deeper into the specific factors fueling Rallis India's surge sheds light on the nuanced interplay between political dynamics, policy expectations, and demand outlook, all of which converge to propel the company's stock price to new heights.

Read on to know the specific details.

#1 PM Kisan Nidhi Impact

Prime Minister Narendra Modi, re-elected for a third term, prioritized farmer well-being by releasing funds for them right after taking office.

He approved the 17th installment of the PM Kisan Nidhi program, which will provide financial aid to 93 million (m) farmers and distribute Rs 200 billion (bn).

This move highlights the government's continued focus on farmers, especially after the recent election, where the ruling party faced challenges in rural areas.

This additional income enables farmers to invest in improving their agricultural practices, including the purchase of agrochemicals, fertilizers, and seeds supplied by companies like Rallis India.

Rallis India, being a major player in the agrochemical sector, stands to benefit from the increased demand for its products, leading to higher sales volumes and revenue growth.

Government support signals stability, fostering investor confidence in the company and positively impacting its share price. Higher farm income translates to improved financial performance for the company.

#2 Strong Demand Outlook

Rallis India anticipates a strong demand outlook, buoyed by the potential onset of La Nina, which typically brings favorable rainfall to India during the Kharif season. This expected weather pattern is likely to drive robust volume growth in the crop care sector.

Consequently, the company holds an optimistic view of the Indian agriculture industry and remains dedicated to adapting to market changes. Government initiatives aimed at enhancing farmer income and addressing agricultural challenges further bolster this positive outlook.

As part of the agriculture value chain, Rallis India is positioned to contribute significantly to industry transformation and is actively enhancing its capabilities to capitalise on emerging market opportunities.

Despite challenges such as low reservoir levels and heat waves impacting demand in the southern region during Q4FY24, encouraging performance in the northern and western regions offsets these setbacks. With La Nina potentially boosting rainfall, management remains hopeful for favorable conditions ahead.

#3 New Plant

Last month the company announced the establishment of an automated 8,000 metric tones water soluble fertiliser (WSF) plant in Akola, Maharashtra.

According to the management, WSF forms a crucial element within the integrated plant nutrient management system, a sustainable approach to comprehensive and balanced crop nutrition. This has also been confirmed through extensive research over several decades.

WSF products are tailored for both foliar and fertigation applications. These products will play a pivotal role in improving soil health, enhancing nutrients uptake and promoting balanced crop nutrition.

The company aims to become one of the top three players in the customised WSF business in India by FY28.

What Next?

Rallis India's financial performance in FY24 presented a contrasting picture.

Revenue dipped 10.6% year-on-year (YoY), from Rs 29.8 bn in FY23 to Rs 26.6 bn in FY24, reflecting sluggish demand. However, the company managed to turn things around on the profitability front.

Its profit surged by a significant 60.9% to Rs 1.5 bn in FY24, demonstrating the effectiveness of their overhead optimisation efforts.

This suggests that the company was able to navigate a challenging revenue environment and emerged with improved profitability.

As mentioned earlier, going ahead the management expect healthy demand in domestic business.

Regarding the international business, the company continues to face lower prices and soft demand due to ongoing channel destocking. This situation is expected to persist for some time.

Challenges are being encountered with Acephate in Brazil, and prices for all key active ingredients remain soft. The geopolitical situation further adds uncertainty to the timing of any potential recovery.

Despite these challenges, Pendimethalin continues to demonstrate good traction, particularly in the US and EU markets. It has already announced plans to scale up production capacities, which are expected to become operational by the end of FY25.

How Rallis India Share Price has Performed Recently

In the past five days, Rallis India share price has rallied 22.8%. In the last month, it is up 18.9%.

In 2024, so far its share price has surged 23.7% and its up 62.1% in the last year.

The stock touched its 52-week high of Rs 320.9 on 10 June 2024 and a 52-week low of Rs 191.5 on 9 June 2023.

About Rallis India

Rallis India is a subsidiary of Tata Chemicals and a part of the Tata Group.

It is one of India's leading agro sciences companies, with more than 160 years of experience servicing rural markets, with the most comprehensive portfolio of products/solutions for Indian farmers.

Rallis is known for its deep understanding of Indian agriculture, sustained contact with farmers, quality agrochemicals, branding & marketing expertise along with its strong product portfolio.

It is also present across the agricultural input value chain and manufactures seeds and organic plant growth nutrients.

The company has partnered with global corporations in the crop protection segment. It does contract manufacturing for them in its four state-of-the-art manufacturing facilities located across India.

For more details, see the Rallis India company fact sheet and quarterly results.

You can also compare Rallis India with its peers:

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