Buy Dhanuka Agritech; target of Rs 950: Prabhudas Lilladher

Prabhudas Lilladher's research report on Dhanuka Agritech

DAGRI reported subdued results (in-line with our estimates but below consensus estimates) with Revenue/EBITDA/PAT decline of 6%/15%/33% YoY amid challenges related to higher channel inventory and cost pressure. Management remains confident of achieving double digit revenue growth in FY24E with 50-100bps YoY improvement in EBITDA margins given new product introductions (launched 2/1/6 new products in herbicide/insecticides and biological range; intends to launch 2-3 new 9(3) and 3-4 new 9(4) molecules in FY24E) coupled with better portfolio mix. Further, expect ~Rs500mn revenue contribution from technical plant at Dahej in FY24E (to be commissioned in August’23-delayed by a month) with initial loss at EBITDA level due to lower utilization. We haven’t factored this in our estimates, as the impact would be insignificant during FY24E.

Outlook

We broadly maintain our FY24/25E EPS estimates and expect Revenue/PAT CAGR of 13%/11%. Maintain ‘Buy’ with an unchanged TP of Rs950 based on 15xFY25E EPS.

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