Dhanuka Agritech Q1 Results Review - Weak Quarter; All Hopes Pinned On Q2 Performance: Prabhudas Lilladher

Prabhudas Lilladher Report

Dhanuka Agritech Ltd. reported subdued results (inline with our estimates but below consensus estimates) with revenue/Ebitda/profit after tax decline of 6%/15%/33% YoY amid challenges related to higher channel inventory and cost pressure.

Management remains confident of achieving double digit revenue growth in FY24E with 50-100 basis points YoY improvement in Ebitda margins given new product introductions (launched two/one/six new products in herbicide/insecticides and biological range; intends to launch two-three new 9(3) and 3-4 new 9(4) molecules in FY24E) coupled with better portfolio mix.

Further, expect ~Rs 500 million revenue contribution from technical plant at Dahej in FY24E (to be commissioned in August 2023-delayed by a month) with initial loss at Ebitda level due to lower utilisation.

We haven’t factored this in our estimates, as the impact would be insignificant during FY24E.

We broadly maintain our FY24/25E earnings per share estimates and expect revenue/profit after tax compound annual growth rate of 13%/11%.

Maintain ‘Buy’ with an unchanged target price of Rs 950 based on 15 times FY25E EPS.

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