Unaffected by the delayed and deficient monsoon, Rallis India came out with substantially better results for the June ‘09 quarter. The net profit for the quarter more than doubled to Rs 9.4 crore despite a 5% fall in its net sales to Rs 166.45 crore. The company improved its operating margins to 11.8% from 9.7% in the corresponding period of last year. This, apart from a spurt in other income and fall in interest and depreciation costs helped it record 30% growth at the PBT level excluding extraordinary items. However, the accelerated depreciation written off during the June ‘08 quarter meant that the current quarter’s financial performance was twice as good of last year. However, the first quarter is not the best indicator of the company’s annual performance, as the agrochemicals business is seasonal. The company is setting up a new plant at Dahej and will be investing around Rs 150 crore over next twelve months. At the same time, it is also expanding capacities at its Ankleshwar facility with an investment of around Rs 50 crore. After a couple of years as a debt-free company, Rallis has borrowed Rs 50 crore from banks in FY09 to fund these expansion plans. The company has increased its net sales at a cumulative annual growth rate of 11% over the last five years, while its net profit has grown 27.5%. The financial strength of the company is also visible in the improving return on capital employed, debtequity and interest coverage ratios. With a spurt in the June ‘09 quarter profit, the company’s EPS for the trailing 12 months now stands at Rs 63.8, which discounts its current market price of Rs 730 by 11.4 times. Based on last year’s dividend of Rs 16 per share, the dividend yield works out to 2.2%. The scrip has gained 117% since the start of ‘09, more than twice that of the benchmark Sensex, which has risen 53%.
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