I think Rallis will be compounding machine because of following reason. I am invested in the stock.

1. Scalability (Huge Market)
2. Good Management (Tata)
3. Competitive Advantage
       - They cover 5 lakh farmers
       - Eight Rallis brands among top Twelve in 2010
       - Tata Group
3. ROE: 25% ROCE: 31%
4. Valuation is high but for a reason
5. Debt Free
6. Growth 30%

Please read below. Taken from their annual report.

"The Rallis Poised agenda has seven growth drivers, viz. New Products, Contract Manufacturing, Brand Premium, Value Enhancement (known as “DISHA” initiative), Overseas market expansion (named “Apollo”), Adjacent Businesses (seeds and PGN, Agri Services) and Inorganic Growth.

Your Company has been pursuing the Rallis Poised growth agenda for consistent delivery of improved performance in
recent years. Several initiatives during the year have reinforced this.

INORGANIC GROWTH

The acquisition of a stake in Metahelix Life Sciences
will firm up the Company’s presence in Seeds business.

ORGANIC GROWTH

The new manufacturing facility at Dahej in Gujarat is expected to become operational shortly. This is a multi-purpose plant and will enhance your Company’s competitive advantage to handle different type of chemistries, increasing the potential to attract contract manufacturing from suitable alliance partners.

INCREASING MOAT

Initiatives such as the Grow More Pulses (MoPu) programme of the Company, where the Company is actively engaged with the farmers in increasing the productivity of pulses, as also helping them in marketing the produce, aims at embracing the entire value chain of products and services to the farming community.

INNOVATION and ORGANIC GROWTH

During the year, your Company has launched
three new products, viz. Taarak (a paddy herbicide), Toran (an insecticide for cotton sucking pests) and Ralligold (a plant growth nutrient), thereby leveraging the strong brand equity of the Company in providing better products to the farmers."

Edited by samirm - 04/Sep/2011 at 10:46am