Prabhudas Lilladher's research report on Dhanuka Agritech
Dhanuka Agritech (DAGRI) reported decent set of numbers amid a challenging domestic scenario led by delayed monsoons and inflationary RM scenario during 1QFY23. It reported Revenue/EBITDA/PAT growth of 8%/- 16%/1% YoY during 1QFY23 which was in-line with our estimates. Key highlights are: (a) volume growth remained flat; while growth was completely led by price growth of 8% YoY; (b) Inflated RM scenario and its inability to fully pass on prices resulted into lower margins; (c) ITI for 1QFY23 stood at 18% as against 10% in FY22; remains confident to improve going forward led by new product launches; (d) to launch 3 new 9(3) and 9(4) molecules each in 1HFY23; (e) capex program of INR3bn for setting up of formulation and technical units at Dahej is well on track; likely to be commissioned by 4QFY23. Going forward, citing the positive demand outlook in the domestic market led by a) pick-up in rainfall activities; b) remunerative crop prices and c) lower 1H base of FY22, DAGRI remains confident of achieving double digit YoY revenue growth in FY23E with margins to be maintained at FY22 levels.
We broadly maintain our FY23/24 EPS and expect DAGRI to clock Revenue/PAT CAGR of 12%/13% each over FY22-FY24E. Maintain ‘BUY’ with a revised TP of INR850(earlier Rs870) based on 15xFY24E EPS.
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