Prabhudas Lilladher's research report on Dhanuka Agritech
Dhanuka Agritech (DAGRI) reported strong set of numbers amid challenges related to adverse weather conditions in the domestic market and volatile RM scenario. It reported Revenue/EBITDA/PAT growth of 24%/19%/15% YoY during 2QFY23 which was above our and consensus estimates. Key highlights are: (a) volume/Price growth of 16%/7% YoY; (b) Inflated RM scenario and its inability to fully pass on prices resulted into lower margins; (c) ITI for 1HFY23 stood at 15% as against 10% in 1HFY22; remains confident to improve going forward led by new product launches; (d) to launch 6 new Bio-logical products in 2HFY23; (e) capex program of INR3bn for setting up of formulation and technical units at Dahej is well on track; likely to be commissioned by 4QFY23. Going forward, citing the positive demand outlook in the domestic market led by good soil moisture and healthy water reservoir levels (particularly in the Southern India) coupled with remunerative crop prices, DAGRI remains confident of achieving double digit YoY revenue growth in FY23E with margins to be maintained at FY22 levels.
Outlook
We broadly maintain our FY23/24 EPS and expect DAGRI to clock Revenue/PAT CAGR of 13%/12% each over FY22-FY25E. We introduce FY25 estimates and roll forward our valuations to FY25E. Maintain ‘BUY’ with a revised TP of INR940(earlier Rs850) based on 15xFY25E EPS.
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