Recommendations From Pesticides & Agro Chemicals Sector

The scrips in this column have been recommended with a 15-day investment horizon in mind and carry high risk. Therefore, investors are advised to take into account their risk appetite before investing, as fundamentals may or may not back the recommendations.

RALLIS INDIA 

CMP - Rs 325.35
BSE CODE -500355
Volume- 2,67,363
Face Value -Rs 1
Target- Rs 355
Stoploss -Rs 300 (CLS)

Rallis India is engaged in the business of manufacturing and marketing agricultural inputs such as pesticides, plant growth nutrients (PGNs) and seeds. On a consolidated quarterly front, the net sales of the company increased to Rs 662.70 crore in Q1FY21, up by 6.33 per cent from Rs 623.24 crore in the same quarter for the previous fiscal year. The operating profit of the company increased significantly by 36.28 per cent to Rs 140.04 crore in Q1FY21 from Rs 102.76 crore in Q1FY20. Similarly, net profit saw impressive growth of 52.58 per cent, increasing to Rs 91.87 crore in Q1FY21 from Rs 60.21 crore in Q1FY20. An increase in contract research and manufacturing services (CRAMS) portfolio along with improving gross margins through a change in the product mix and increasing backward integration is likely to lead the stock on a new trajectory. Our recommendation is to BUY the scrip. 

INDIA GLYCOLS 

CMP - Rs 310.75
BSE CODE - 500201
Volume - 92,569
Face Value -Rs 10
Target - Rs 342
Stoploss -Rs 285 (CLS)

India Glycols is engaged in the manufacture of technology-based bulk, speciality and performance chemicals as well as natural gums, spirits, industrial gases, sugar and nutraceuticals. On the consolidated quarterly front, net sales fell by 35.69 per cent to Rs 908.72 crore in Q1FY21 from Rs 1,412.96 crore in the corresponding quarter for the previous fiscal year. The company reported an operating profit of Rs 56.40 crore in Q1FY21, down by 50.26 per cent from Rs 113.38 crore in Q1FY20. The company posted net profit of Rs 4.61 crore in Q1FY21 and Rs 34.45 crore in the same quarter for the previous fiscal year. Although the financials for the quarter were deeply impacted by the lockdown, the operating profit margin for the company saw improvement on a YoY and QoQ basis and was reported at 14.25 per cent in Q1FY21. The restart of economic activity is likely to propel recovery for India Glycols. Our recommendation is to BUY the scrip.

(Closing price as of Aug 25, 2020)