Buy Dhanuka Agritech; target of Rs 717: Dolat Capital

Dolat Capital's research report on Dhanuka Agritech

Dhanuka Agritech reported a healthy Q4FY20 performance with Sales/EBITDA/PAT growing at 18.1/38.6/45.8% to Rs 2.2bn / 458mn / 390 mn. Sales were in-line (D.est: Rs 2.31bn) with our estimates while EBITDA/PAT came ahead of our estimates (D.est: Rs 409mn/313mn). ? Sales growth was driven by higher volume growth of 19.0%, the company has taken price hikes for the upcoming Kharif season. ? Gross margins expanded by 84 bps YoY due to a favorable product mix and with RM costs stabilizing. ? Employee cost and other expenses grew by 1.8/14.0% YoY to Rs 242/276mn. A higher other income and a lower tax rate YoY, fueled PAT growth of 45.8% YoY.

Outlook

We continue to be positive on Dhanuka Agritech, value Dhanuka Agritech at 17x FY22E EPS and maintain our Buy rating on the stock with a target price of Rs 717/share.

Dhanuka Agritech 13062020