The monsoons have started. It is the time when farmers start sowing to reap their crops during dassera and diwali. If you think logically for good crops farmers will use pesticides and insecticides. Rallis India's does business in Pesticides and other agrochemicals. Rallis having major market share is this business will be the first one to benefit from the monsoon as the sales of agrochemicals rise in this season. Every year as the monsoon season starts the increase in the sales of Rallis products is visible in the increase of the Rallis share price. Almost every year there will be a sudden spurt in the share price from the start of june. Last year the share price rose from Rs.1000 during start of june 2010 and acheived a peak of 1590 during september 2010 giving a returns of 59% for investors who bought rallis in june2010. During the harvest period of september for obvious reasons farmers stop buying pesticides reducing the sales of Rallis. Every year Rallis is stock to buy during the start of june and sell it with an average return of 30% at the mid of september.
This year also Rallis has started rising again from the levels of Rs.1390 at the end of may. Now Rallis is at Rs.1500 but the stock still has exceptional value as the sales of Rallis are growing every year by an average of 10% and profit are growing at an average of 15%. Also MET department of India has predicted Normal rainfall for this year which means farmers will have adequate water to culivate at the maximum. This factor itself makes me predict a rise of the stock to Rs.2000/- but the current negative sentiments makes me give a conservative target of Rs.1850-1900 till september giving 23-26% returns which is far higher than any fixed deposit for 3 months period in the market . Even if the stock falls(due to sudden negativity in market) from current levels and stays below 1500 after we buy the stock, we can hold this stock for long term as it is a Tata Group Company and after being in the stock market for more than 3 yrs I feel Tata Group is the most trust worthy of the business groups.
Please find below the one year graph of Rallis.
This year also Rallis has started rising again from the levels of Rs.1390 at the end of may. Now Rallis is at Rs.1500 but the stock still has exceptional value as the sales of Rallis are growing every year by an average of 10% and profit are growing at an average of 15%. Also MET department of India has predicted Normal rainfall for this year which means farmers will have adequate water to culivate at the maximum. This factor itself makes me predict a rise of the stock to Rs.2000/- but the current negative sentiments makes me give a conservative target of Rs.1850-1900 till september giving 23-26% returns which is far higher than any fixed deposit for 3 months period in the market . Even if the stock falls(due to sudden negativity in market) from current levels and stays below 1500 after we buy the stock, we can hold this stock for long term as it is a Tata Group Company and after being in the stock market for more than 3 yrs I feel Tata Group is the most trust worthy of the business groups.
Please find below the one year graph of Rallis.
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