Rallis India (RALLIS)

FairStock Score: 31/100 — RISKY

Score breakdown: P/E: 1/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Strong promoter holding of 55.08% aligns interests with minority shareholders
• Near-zero debt with debt/equity of 0.03 provides balance sheet resilience
• Sales growth of 19.35% shows business momentum
• Piotroski F-score of 7/9 suggests improving fundamentals
• Dividend yield of 0.90% offers modest income support

Concerns

• Latest quarter net profit of only ₹2 Cr on ₹623 Cr sales implies razor-thin margins and weak earnings quality
• ROE of 8.68% and ROCE of 10.12% are subpar for a business priced at 29.23 times earnings
• P/B of 2.67 is rich relative to book value of ₹97.83
• 118.18% profit growth may reflect a low/cyclical base rather than durable compounding

AI Analysis

Rallis India is not the kind of business I would normally gravitate toward. Its stated ROE of 8.68% and ROCE of 10.12% tell me that each rupee retained by the company earns a modest return—far below what I expect from a great compounder. The balance sheet is conservative, with debt-equity of just 0.03, and promoter holding at 55.08% gives comfort. But conservatism cannot rescue a high price. Sales grew 19.35% and reported profits jumped 118.18%, but the latest quarter tells a more sobering story: ₹623 crore of sales produced only ₹2 crore of net profit. That is a negligible margin and a reminder that agrochemical earnings are cyclical and volatile. A Piotroski F-score of 7/9 suggests recent fundamentals are improving, yet the price-earnings ratio of 29.23 and price-to-book of 2.67 demand near-perfect execution. Even with a PEG of 0.43, that ratio is only meaningful if the 118% profit growth is durable, not a rebound from a depressed base. I cannot call this an asset play; book value is ₹97.83 against a price of ₹261.60. Nor can I call it a stalwart with these returns on capital. This looks like a cyclically recovering business with decent long-term demand—agriculture is essential—but the margin of safety is thin. The FairStock score of 41/100 matches that mixed read. I would wait for a lower price, or for evidence that quarterly earning power has genuinely improved beyond this ₹2 crore profit. The stock has already fallen from ₹385.80 to ₹261.60, which helps, but value is made when you pay a fair price for an understandable business. Here, the numbers say 'mixed'—and I can live with missing the rally.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer