Buy Dhanuka Agritech; target of Rs 155: Dolat Capital

“Dhanuka Agritech (DAL) is engaged in the business of agro-chem, plant growth regulators and seeds. Dhanuka Pesticides Ltd. (DPL), promoted by Dhanuka Group of Industries, was incorporated in 1985. During 2007, Northern Minerals Ltd. (NML) amalgamated with DPL and the entity was rechristened to Dhanuka Agritech Ltd. (DAL). DAL’s core strength lies in its deep and widespread distribution network across rural India. The company has a network of over 32 branch offices, 7,000 distributors / dealers and 70,000 retailers. The company’s flagship brands include Targa Super, Caldan, Omite, Markar, Dunet and Dhanzyme. DAL has three manufacturing facilities located in Gurgaon, Sanand and Udhampur.”

“We expect 20% revenue growth over FY11-14E, driven by new product launches and higher contribution from herbicides. Exclusive launches on the cards include two herbicides (through Nissan tie-up) and one fungicide (through DuPont tie-up) to be introduced over next 2-3 years. Of these, one of Nissan’s herbicides is under patent protection.”

“At CMP of Rs 100, the stock trades at 8.2x FY12E and 6.5x FY13E earnings. We initiate coverage on the stock and recommend a Buy rating with a target price of Rs 155 (10x FY13E EPS). With healthy return ratios (+30%) and no fears of any dilution plan, the picture looks comfortable. Also, land sale will further strengthen the balance sheet,” says Dolat Capital research report.  

Institutional holding more than 40% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.