This Rakesh Jhunjhunwala stock is up 92% since March; there may still be more upside

Rallis India’s share price has almost doubled since the end of March this year, having gained 92%. Rallis India stock has jumped from its March lows of Rs 149 apiece to Rs 286 per share now. However, that may not be the end to this Tata Group firm that operates in the farming sector, as analysts see Rallis India’s gaining market share in both domestic and international markets helped by the firm’s aggressive pricing strategy. Ace investor Rakesh Jhunjhunwala is also a known investor in Rallis India, holding over 10% stake in the firm.

In the recent analyst meet, Rallis India’s management said that the company aims to enter the top-3 club of the largest players in the agrochemical space. “Management expects that due to agri reforms, improving irrigation and government support on manufacturing should help the agrochemical industry to grow at 8-10% CAGR over the next 4-5 years vs. 5-6% CAGR over the last 5 years,” brokerage and research firm Emkay Global said in a recent report. Although scaling higher to reach 18% EBITDA margins by financial year 2023 is a tough task, Rallis India is looking to sustain or improve working capital efficiency to aid growth.

In the international business, except for Metribuzin, RALI’s capacities are fully booked for the next quarter, indicating sustained momentum, according to Emkay Global. Rallis India works in the areas of crop protection, contract manufacturing, seeds, and even has a strong international presence.

“We expect RALI to deliver 14% EPS CAGR over FY21-23E. We expect RALI’s ROE to improve 189bps over FY20-23E,” Emkay Global said. The brokerage firm said that ramp-up in Metribuzin capacity remains the key monitorable for the second half of this fiscal year. “We maintain Buy with a revised TP of Rs320, based 23x Dec’22E EPS,” they added. Rallis India has 4 ‘Strong Buy’ calls and 7 ‘Buy’ calls from analysts, according to Refinitiv.

The Big Bull Rakesh Jhunjhunwala has increased his stake in the firm from holding 1,93,05,820 equity shares at the end of the March quarter of the previous fiscal year to now holding 2,00,30,820 equity shares of Rallis India at the end of the September quarter of this fiscal year. In the month of November alone, the Big Bull made Rs 56 crore from Rallis India as the stock gained 11% during the previous month.