Stock watch: Rallis India

Rallis India, a Tata group company, has been buzzing on the bourses on strong fundamentals. According to market sources, institutional investors including Templeton has been buying into the counter in the past few days.

There are rumours doing the rounds that Rallis may eventually get merged with Tata Chemicals, another Tata group company.

Though the stock corrected in Friday's trading to end 1.28 per cent lower at Rs 331.20, in the last one month it has appreciated by more than 26 per cent on strong volumes.

An industry analyst with a domestic broking firm said, "with balance sheet becoming stronger given its declining debt levels, efficient working capital management, improving cash flows and a focused approach, we expect Rallis to be better placed to turnaround its fortunes in the coming years."

At the current market price, the stock trades at 10 times to estimated earning per share of Rs 32 estimated for FY06.

The company holds strong position in the market with the number 2 slot and a market share of 13 per cent. Further with distribution network, covering 80 per cent of districts, with more than 1,500 dealers and strong field force of 200 people, the company is better placed to take on competition from any MNC in future.