Buy Dhanuka Agritech; target of Rs 1850: Anand Rathi

Anand Rathi's research report on Dhanuka Agritech

Broadly in line with consensus and our estimates, Dhanuka Agritech reported a decent set of Q3 figures. Revenue/EBITDA/PAT grew 10%/22%/21% y/y. Key highlights: a) less pest infestation restricted revenue growth to 10% y/y in Q3 FY25, b) cheaper RM and a better product mix pushed up the gross margin 130bps y/y to 39.9%, c) innovation turnover index for 9M FY25 at 16.6% (15.3% a year ago), d) introduced one 9(4) product – “Roxa” – Pyroxasulfone 85% WG for the wheat crop, e) plans to launch eight 9(3) molecules in the next two years, f) acquired international rights of Iprovalicarb and Triadimenol from Bayer AG, aiming at global expansion, including manufacturing in India.

Outlook

Factoring in the 9M FY25 performance, management lowered its revenue growth guidance from 16% earlier to 14%, while it maintained the margin guidance of 100bp y/y improvement. We trim our FY25e 4% factoring in slower revenue growth, but broadly maintain our FY26e/27e. We maintain a Buy, with a revised TP of Rs1,850, 22x FY27e EPS (earlier Rs1,900).