Nov 08, 2012 02:05 PM IST | Source:

Hold Dhanuka Agritech; target of Rs 146: Nirmal Bang

Nirmal Bang has recommended hold rating on Dhanuka Agritech with a target of Rs 146 in its November 7, 2012 research report.

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Nirmal Bang has recommended hold rating on Dhanuka Agritech with a target of Rs 146 in its November 7, 2012 research report.

“Dhanuka Agritech reported revenues in line with expectations. Reported revenue of Rs 206.3 cr grew 6.4% yoy and 90.8% qoq, with sales picking up at in the second half of the quarter with late monsoons. Absolute EBITDA grew 8.5% yoy and 94.2% qoq while EBITDA margin rose to 14.8% (up 30 bps yoy and 20 bps qoq) on lower other expenses. PAT rose at a higher 12.9% yoy and 111.4% qoq on strong operational performance and lower interest expense. H1FY13 sales have grown 9.1% yoy while PAT grew 12.4% over H1FY12.”

“Revenue growth of 6% during the quarter has been contributed equally by volume growth and price hikes. There have been no new launched during the quarter. DAL has launched a biofertilizer in Q3FY13. Forex loss during the quarter stood at Rs 1 cr (vs. Rs 0.5 cr in Q2FY12). Insecticides contribution to sales has increased during the quarter while that of Fungicides has fallen. Insecticides, Herbicides, Fungicides and PGRs contributed 49%, 31%, 10% and 10% respectively to sales in H1FY13. North, South, East and West zones contributed 27%, 26%, 13% and 34% of sales in H1 FY13, with contribution from West zone falling due to drought-like condition in Saurashtra, Gujarat. DAL has bought 10 acres land in Rajasthan at a cost of Rs 5 cr to set up a Greenfield facility for formulations with a total capex of Rs 45 cr. This unit is likely to get commissioned in March 2014, and will be funded entirely from internal accruals.”

“At CMP the stock trades at 9.9x FY13E and 8.2x FY14E. With Q2FY13 sales picking and the company being able to maintain margins, and with an optimistic outlook on rabi, we have revised our numbers upwards. Rolling forward our estimates to FY14E, we arrive at a target price of Rs 146 (based on 10.0x FY14E EPS) indicating potential upside of 14% from current levels. We maintain our hold rating on the stock,” says Nirmal Bang research report.

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