Long Term Investment Idea (12-18 Months)

Dhanuka Agritech Ltd Result Update | Sector: Agro-Chemicals

Rising Star | Sector: Agro-Chemicals I Result Update
Retail Research I 2QFY25 I BUY
Date 8th November 2024 Dhanuka Agritech Ltd.
Key highlights of the 2QFY25 Result
Current Price* Rs.1,608.0
Target Price Rs.1,982.0 Subdued performance despite above-average rainfall: The 2nd quarter of the
Upside 23.2% financial year is seasonally strong but given an extended monsoon and
*CMP is as per the live price of 8th Nov. 2024 uneven spread, the revenue growth was impacted by nearly Rs 100 cr. For
STOCK DATA the quarter, Dhanuka registered Revenue/EBITDA/PAT growth of
Industry Segment Agro-Chemicals 5.9%/12.7%/15.5% YoY to Rs 654.3 cr/ Rs 159.6 cr/ Rs 117.5 cr respectively.
BSE Code 507717 The EBITDA margin during the quarter improved 150 bps YoY to 24.4% largely
NSE Code DHANUKA led by a favourable product mix and strong traction in newly launched
Bloomberg Code DAGRI IN products. The extended monsoon and cyclone Dana led to some impact on
52 Week High / Low (Rs.) 1,925/784 volume off-take as early sowing of Onion and Potato crops was badly
Face Value (Rs.) 2.0 impacted thus leading to higher prices of both vegetables.
Diluted Number of Shares (Crore.) 4.5
Market Cap. (Rs Crore.) 7,252
Water reservoir to support growth during 2HFY25: Above average rainfall
Avg. Yearly NSE Volume 77,390
has resulted to highest water reservoir level in 10 years and management is
confident of recovery in volume during 2nd half. The favourable farm prices
are too expected to support the growth.
Share Holding Patterns (%)
Particulars
Revenue guidance is lowered however margin to improve by 100 bps over
Dec-23 Mar-24 Jun-24 Sep-24 FY24: The company, owing to lower volume growth in 2Q, has reduced its
Promoters 70.2 70.2 70.2 70.3 top-line guidance from 18% earlier to 16% for FY25. The margin guidance
FII 1.3 1.5 1.5 2.0 however upgraded 100 bps above the FY24 EBITDA margin. The favourable
Other Institution 18.4 18.9 19.3 19.0 product mix backed by new launches to support the margin expansion. The
Public & Others 10.1 9.4 9.0 8.7
company has launched 3 new 9(3) molecules viz Lanevo (insecticide), Purge
Total 100.0 100.0 100.0 100.0
(Herbicide), Mycore Super (Fungicide) earlier and all the products have been
showing strong demand traction. The company, over the next 2 years, has
Return Statistics (%) plans to launch 8 new products under 9(3) segments.
Particulars 1M 3M 6M 12M
Exploring tie-up with patented technical makers for CRAMS: The
Dhanuka Agritech Ltd 10.7 (7.3) 16.2 104.7
commercial production of Dahej plant has commenced and management
Nifty Small Cap 3.6 5.8 13.3 43.8
expects it to turn EBITDA positive once utilization picks up. It has generated
sales of Rs 8 cr during the 1HFY25 with EBITDA loss of Rs 4.75 cr. The company
Valuation and return ratio also plans to add 1 more product and is also exploring the tie-ups with
Y/E March 2022A 2023A 2024A 2025E 2026E patented technical makers for CRAMS.
PE (x) 35.9 31.4 30.7 23.6 19.7
Maintain buy rating- Target Rs 1,982.0/-
P/BV (x) 7.8 6.9 5.8 5.0 4.1
At the current price, the stock is trading at P/E multiple of 23.6x/19.7x of its
EV/EBITDA (x) 28.4 26.3 22.4 17.7 15.1
FY25E/FY26E earnings respectively. We maintained our buy rating on the
EV/Sales (x) 5.1 4.3 4.2 3.5 2.9
stock but have lower price target to Rs 1,982.0/- thus providing an upside
Mcap/Sales (x) 5.1 4.3 4.2 3.5 2.9
potential of 23.2%.
ROE (%) 23.8 23.1 20.6 22.7 22.9
ROCE (%) 30.0 28.9 26.7 29.4 29.6 Financial Summary (Rs cr)
Price Chart (1-year) Particulars 2022A 2023A 2024A 2025E 2026E
Net Sales 1,477.8 1,700.2 1,758.5 2,050.9 2,529.9
Dhanuka Agritech Ltd Nifty Smallcap
250 Growth (%) 6.5 15.1 3.4 16.6 23.4
225 EBITDA 263.5 278.7 327.4 408.6 480.7
200
175 Growth (%) (2.1) 5.8 17.5 24.8 17.6
150
125 Net Profit 208.9 233.5 239.1 307.4 367.4
100 Growth (%) (0.8) 11.8 2.4 28.6 19.5
75
50 EPS (Rs) 44.8 51.2 52.4 68.2 81.5
Jan-24

Mar-24

May-24

Jul-24

Sep-24
Nov-23

Nov-24

Growth (%) (0.8) 14.2 2.3 30.0 19.5

DPS (Rs) 3.0 3.0 3.0 3.0 3.0
Rajesh Gupta ([email protected]) Div. Yield (%) 0.9 0.1 0.9 0.1 0.9
Source: Company, SSL Research

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Dhanuka Agritech Ltd. Result Update | Sector: Agro-Chemical

2QFY25 Result Figures in Rs. Cr.

Q-O-Q Y-o-Y
Quarter Ended 2QFY25 1QFY25 2QFY24 Comments
% Change % Change
Net Sales 654.3 493.6 32.6 617.9 5.9 Strong volume growth
Other Income 10.8 7.1 51.4 5.8 87.6
Total Income 665.1 500.7 32.8 623.7 6.6
Total Operating
494.7 421.9 17.3 476.3 3.9
Expenditure
Material Cost 378.3 322.5 17.3 369.0 2.5
As % of Sales 57.8 65.3 - 59.7 -
Other Exp. 116.4 99.3 - 107.4 -
As % of Sales 17.8 20.1 - 17.4 -
EBDITA ( Excl OI) 159.6 71.7 122.5 141.6 12.7 Favorable product mix and stable prices
EBDITA ( Incl OI) 170.4 78.9 116.1 147.3 15.6
Interest & Finance Cost 1.1 0.8 26.0 0.8 38.8
PBDT 169.3 78.0 117.0 146.6 15.5
Depreciation. 12.7 12.3 3.2 9.9 28.2
PBT 156.7 65.7 138.3 136.7 14.6
Tax 39.1 16.8 132.3 34.9 12.0
Net Profit 117.5 48.9 140.3 101.8 15.5 Better margin and volume growth

Operating Margins (%) 24.4 14.5 22.9

Net Profit Margins (%) 18.0 9.9 16.5
Tax Rate (%) 25.0 25.6 25.6
Equity (Rs Cr) 9.1 9.1 9.3
FV (Rs) 2.0 2.0 2.0
EPS (Rs) 25.8 10.7 21.8
Cash EPS (Rs) 28.6 13.4 24.0

Estimate Revision
New Estimate Old Estimate % Change
Particulars (Rs. Cr.)
FY25E FY26E FY25E FY26E FY25E FY26E
Revenue 2,050.9 2,529.9 2,121.40 2,465.60 (3.3) 2.6
EBITDA 408.6 480.7 382 439.7 7.0 9.3
EBITDA Margin (%) 19.9 19.0 18 17.8 1.9 1.2
PAT 307.4 367.4 299.9 348.5 2.5 5.4
EPS (Rs. Per share) 68.2 81.5 65.8 76.4 3.6 6.6

Source: SSL Research

SBICAP Securities Limited | 2

 Dhanuka Agritech Ltd Result Update | Sector: Agro-Chemicals

Financial Statements
Income Statement Figures in Cr. Balance Sheet: Figures in Cr.
Particulars 2022A 2023A 2024A 2025E 2026E Equities & Liabilities 2022A 2023A 2024A 2025E 2026E
Net Sales 1,477.8 1,700.2 1,758.5 2,050.9 2,529.9 Share capital 9.3 9.1 9.1 9.0 9.0
Other Income 33.6 44.8 35.0 51.3 63.2 Reserves and surplus 951.1 1,052.2 1,246.8 1,445.1 1,749.4
Total Income 1,511.4 1,745.0 1,793.5 2,102.1 2,593.2 Total Shareholder's Fund 960.4 1,061.3 1,255.9 1,454.1 1,758.4
Total Expenditure 1,214.3 1,421.5 1,431.1 1,642.2 2,049.3 Non-current liabilities
Raw Material Consumed 939.1 1,115.5 1,072.2 1,224.5 1,531.3 Long Term Provision 0.2 2.9 1.8 2.1 2.5
As % of Sales 63.5% 65.6% 61.0% 59.7% 60.5% Long-term borrowings - - - - -
Other Operating Cost 275.2 306.1 358.9 417.7 518.0 Other Non-Current Liabilities 47.2 43.2 43.3 51.0 62.4
As % of Sales 18.6% 18.0% 20.4% 20.4% 20.5% Current liabilities 304.4 297.9 278.1 308.0 371.9
EBDITA ( Excl OI) 263.5 278.7 327.4 408.6 480.7 Total Liabilities 1,312.2 1,405.3 1,579.1 1,815.3 2,195.2
EBDITA ( Incl. OI) 297.1 323.4 362.4 459.9 543.9 Assets
Interest 3.2 3.1 3.1 3.1 3.2 Net Fixed Assets 207.0 317.8 366.3 381.6 394.8
PBDT 293.9 320.3 359.3 456.7 540.7 Non-current investments 139.8 158.9 167.8 248.0 292.8
Depreciation 16.3 17.6 40.6 46.9 50.8 Long-term loans and advances 4.5 26.3 16.1 20.5 25.3
PBT 277.6 302.7 318.8 409.9 489.9 Other non-current assets 6.2 6.1 3.1 9.8 9.1
Tax 68.7 69.2 79.7 102.5 122.5 Current Assets
Net Profit 208.9 233.5 239.1 307.4 367.4 Current Investment 196.1 95.8 71.8 159.4 209.1
Inventories 347.2 345.1 417.9 427.4 539.0
Trade receivables 282.5 339.0 346.8 390.5 492.1
Cash Flow Statement Figures in Cr. Cash and bank balances 2.4 4.3 1.3 3.7 18.0
Particulars 2022A 2023A 2024A 2025E 2026E Short Term Loans and Advances 0.7 0.5 25.8 10.3 12.6
PBT 277.6 302.7 318.8 409.9 489.9 Other Current Assets (Incl Fin) 125.8 111.5 162.2 164.1 202.4

Depreciation 16.3 17.6 40.6 46.9 50.8 Total Current Assets 954.7 896.1 1,025.8 1,155.4 1,473.3

Interest (Net) 3.2 3.1 3.1 3.1 3.2 Total Assets 1,312.2 1,405.3 1,579.1 1,815.3 2,195.2

Direct Taxes Paid (68.7) (69.2) (79.7) (102.5) (122.5)

Change in WC (53.9) (71.0) (159.8) (22.3) (194.2)
Key Ratios
Particulars 2022A 2023A 2024A 2025E 2026E
Cash flow from op. activities 174.5 183.3 122.9 335.1 227.3
(A) Growth (%)
(Incr. ) / Decr. Capex (44.2) (125.7) (80.8) (57.2) (57.5)
Net Sales 6.5 15.1 3.4 16.6 23.4
Free Cash Flow 130.3 57.6 42.2 278.0 169.7
EBITDA (2.1) 5.8 17.5 24.8 17.6
(Incr.) / Dec. in Investment (57.9) 81.2 15.0 (167.8) (94.5)
PBT (2.6) 9.1 5.3 28.6 19.5
Cash flow from inv. activities (102.1) (44.5) (65.7) (224.9) (152.0)
Net Profit (0.8) 11.8 2.4 28.6 19.5
Change in R&S (Buyback) - (84.8) - (100.0) -
Cash Profit (0.3) 11.5 11.4 26.7 18.1
Change in Debt (7.4) 2.8 (3.3) 1.5 -
(B) Measures of Performance
Interest Paid (3.2) (3.1) (3.1) (3.1) (3.2) Operating Profit Margin (%) 17.8 16.4 18.6 19.9 19.0
Dividend (46.6) (27.9) (45.6) (9.0) (63.1) Gross Profit Margin (%) 36.5 34.4 39.0 40.3 39.5
Cash flow from fin. activities (57.2) (113.0) (52.0) (110.6) (66.4) Total Tax Rate (%) 24.7 22.9 25.0 25.0 25.0
Other Adjustment (Net) (14.3) (24.0) (8.2) 2.9 5.4 Net Profit Margin (%) 14.1 13.7 13.6 15.0 14.5
Net Change in cash 0.9 1.8 (3.0) 2.4 14.3 (C) Measures of Financial Status
Opening Balance 1.5 2.4 4.3 1.3 3.7 Debt / Equity (x) 0.0 0.0 0.0 0.0 0.0
Closing Balance 2.4 4.3 1.3 3.7 18.0 Net Debt / Equity (x) (0.0) (0.0) (0.0) (0.0) (0.0)
Debtors Period (days) 64.9 66.7 71.2 69.5 71.0
Recommendation History Creditors Period (days) 42.6 44.9 41.4 42.0 40.0
Inventory Period (days) 64.9 66.7 71.2 69.5 71.0
Close Price Target Price
Cash Conversion Cycle (Days) 87.1 88.5 100.9 97.0 102.0
2,223 (D) Measures of Investment
2400
EPS (Rs) 44.8 51.2 52.4 68.2 81.5
2200
2000 Book Value (Rs) 206.2 232.9 275.4 322.4 389.9
1,982 Dividend Yield (%) 0.9 0.1 0.9 0.1 0.9
1800 1,547
1600 ROA (%) 17.1 17.2 16.0 18.1 18.3
1400 Return on Net Worth (%) 23.8 23.1 20.6 22.7 22.9
1200 912 Return on Cap. Employed (%) 30.0 28.9 26.7 29.4 29.6
1000 820 Interest Coverage (x) 87.7 98.1 104.3 131.2 153.6
800 (E) Measures of Valuation
600 35.9 31.4 30.7 23.6 19.7
P/E (x)
400
M. Cap to Sales (x) 5.1 4.3 4.2 3.5 2.9
Nov-22 Mar-23 Jul-23 Nov-23 Mar-24 Jul-24 Nov-24
EV/Sales (x) 5.1 4.3 4.2 3.5 2.9
28.4 26.3 22.4 17.7 15.1
SBICAP Securities Limited I Rajesh Gupta I Tel.: 022-4366 3524 I email: [email protected]
EV/EBDITA (x)

Source: Company, SSL Research

3
Dhanuka Agritech Ltd. Result Update | Sector: Agro-Chemical

Our recent rising star recommendations and price performances

Initiated Initiated Return (%) since Latest rec. Latest

Sr.No. Company Name NSE Symbol CMP
Date Price initiated date Date Target
1 APL Apollo Tubes Ltd. APLAPOLLO 25-Apr-23 1,219.0 1,520.0 24.7 05-Nov-24 1,717.0
2 Stylam Industries Ltd. STYLAMIND 27-Apr-23 1,150.0 2,259.9 96.5 13-Feb-24 1,886.0
3 Star Cement Ltd. STARCEMENT 05-May-23 123.2 204.0 65.5 14-Aug-24 240.0
4 JK Lakshmi Cement Ltd. JKLAKSHMI 24-May-23 705.0 775.7 10.0 07-Aug-24 963.0
5 Dhanuka Agritech Ltd. DHANUKA 29-May-23 711.0 1,615.7 127.2 05-Aug-24 2,223.0
6 Zen Technologies Ltd. ZENTEC 12-Jul-23 520.0 1,873.6 260.3 05-Nov-24 2,214.0
7 SJS Enterprises Ltd. SJS 05-Oct-23 680.0 1,210.0 77.9 04-Nov-24 1,453.0
8 KPI Green Energy Ltd. KPIGREEN 17-Nov-23 389.3 795.0 104.2 14-Aug-24 1,246.0
9 Syrma SGS Technology Ltd. SYRMA 06-Dec-23 590.0 567.0 -3.9 29-Oct-24 610.0
10 Senco Gold Ltd. SENCO 11-Dec-23 721.6 1,152.5 59.7 16-Aug-24 1,099.0
11 Hi-Tech Pipes Ltd. HITECH 31-Jul-24 149.0 186.0 24.8 31-Jul-24 190.0
12 Aditya Birla Capital Ltd. ABCAPITAL 31-Oct-24 222.2 203.3 -8.5 31-Oct-24 275.0
CMP is based on closing price as of 7th Nov. 2024

SBICAP Securities Limited | 4

Dhanuka Agritech Ltd Result Update | Sector: Agro-Chemicals

SBICAP Securities Limited

(CIN): U65999MH2005PLC155485
SEBI Registration No.: Stock Broker: INZ000200032 | DP Registration No.: IN-DP-314-2017| Research Analyst : INH000000602
Portfolio Manager: INP000004912 | IRDA : CA0103 | PFRDA Registration No: POP 26092018
Registered & Corporate Office: Marathon Futurex, Unit No. 1201, B-Wing, 12th Floor, N M Joshi Marg,
Mafatlal Mill Compound, Lower Parel East, Mumbai 400013
For any information contact us: (022) 6854 5555
E-mail: [email protected] I Web: www.sbisecurities.in

DISCLOSURES & DISCLAIMERS:

Analyst Certification: The views expressed in this research report ("Report") accurately reflect the personal views of the research analysts
("Analysts") employed by SBICAP Securities Limited (SSL) about any and all of the subject issuer(s) or company(ies) or securities. This report has
been prepared based upon information available to the public and sources, believed to be reliable. I/We also certify that no part of my/our
compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.
The Analysts engaged in preparation of this Report or his/her relative:-
(a) do not have any financial interests in the subject company mentioned in this Report; (b) do not own 1% or more of the equity securities of
the subject company mentioned in the report as of the last day of the month preceding the publication of the research report; (c) do not have
any material conflict of interest at the time of publication of the Report.
The Analysts engaged in preparation of this Report:-
(a) have not received any compensation from the subject company in the past twelve months; (b) have not managed or co-managed public
offering of securities for the subject company in the past twelve months; (c)have not received any compensation for investment banking or
merchant banking or brokerage services from the subject company in the past twelve months; (d) have not received any compensation for
products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve
months; (e) has not received any compensation or other benefits from the subject company or third party in connection with the Report; (f) has
not served as an officer, director or employee of the subject company; (g) is not engaged in market making activity for the subject company.
Name Qualification Designation
Sudeep Shah MMS-Finance DVP- Technical & Derivative Research
Sunny Agrawal B.E, MBA (Finance) DVP - Fundamental Research
Rajesh Gupta PGDBM (Finance), MA (Bus. Eco) AVP - Fundamental Research
Monica Chauhan C.A. Research Analyst - Equity Fundamentals
Harsh Vasa CA Research Analyst - Equity Fundamentals
Sumeet Shah B.E., CFA Research Analyst - Equity Fundamentals
Sweta Padhi MBA (Finance) Research Analyst - Equity Fundamentals
Uday Chandgothia B-Tech, MBA (Finance) Research Associate - Equity Fundamentals
Gautam Updhyaya MBA (Finance) Research Analyst - Equity Derivatives
Vinayak Gangule BE (IT) Research Analyst - Equity Technicals
Ghanshyam Gupta MBA (Finance) Research Analyst- Currency Derivative
Sagar Peswani B.Tech (ECE) Research Associate - Equity Technicals
Kalpesh Mangade B.Com MIS Analyst - Retail Research

For other Disclosures please visit: https://bit.ly/R_disclaimer02

Sudeep Shah Sunny Agrawal

DVP – Technical & Derivative Research DVP – Fundamental Research