We are initiating coverage on Dhanuka Agritech Limited (DAGRI) with a BUY recommendation and a Target Price of Rs 880 which implies 27% upside from the current levels.

We have upgraded DAGRI's Topline/EBITDA/APAT estimates for FY21 and FY22 by 6%/12%/12% and 6%/8%/9%. Despite factoring in higher earnings growth we downgrade the stock to HOLD (from Buy) given very sharp run up in stock price. We roll forward to Sept'22E earnings and revise our target price to Rs857 (previous Rs656) based on 18x (previous 16x) Sept'22 EPS of...

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...

interstate trade thereby giving freedom to farmers for selling at an attractive enable much needed formalisation of the sector leading to better pricing of produce, more predictability in cropping pattern and generate better income for farmers. For agri-inputs industry, agriculture reforms do not entail any immediate benefit however they help to enhance long term structural growth. Formulating a Central law for Inter-state trade- Earlier reform measures of the Modi govt (like creating a model law for the states to deregulate marketing of fruits and vegetables, creating an electronic unified national market for agricultural...

Total Industry volume is up 11% to 4.4 mn tons. Urea/NPK/DAP sales are @ 2.5 mn tons/0.8 mn tons/0.5 mn tons, up 3%/28%/26% resp. SSP volumes grew 10% to 0.3 mn tons. Domestic phosphatic fertiliser sales...

Dhanuka Agritech reported mixed set of results. Benefits of higher than Change in Estimates | Target | Reco anticipated topline growth of 25% (PLe- 15%) was off-set by continued gross margin contraction (11th straight quarter) of 146 bps. Higher other income (up...

Dhanuka agritech reported a muted 1QFY20 performance, Sales/EBITDA grew by 2.8/25.9% YoY to ` 2.19bn/200mn respectively. PAT de-grew by 8.6% YoY to ` 148mn. Results were below our estimates on all fronts. Gross margins continue to be under pressure as rising prices of certain technicals (Cartap Hydrochloride technical for Caldan') could not be passed on. Though gross margins saw a contraction of 110bps YoY to 34.1%, EBITDA margins expanded by 170 bps YoY owing to lower employee costs (down 7.9% YoY) and other expenses (down 7.1% YoY)....

After seeing a 370bps yoy contraction at the operating level, we believe that Dhanuka Agritech (DAGRI) is geared for a 200bps yoy margin recovery along with an acceleration in revenue growth (8%/9% in FY20E/FY21E vs. 2% yoy in FY19). FY18-19 was one of the most unpredictable years for agro-chemical intermediate prices. As a result, the prices of key raw-materials such as metribuzin, lamda, and bifenthrin increased in the range of 150-400%....

Dhanuka Agritech (DAGRI) maintained that the launch of new products will continue to drive growth for the company in FY20. It is also increasing its distribution reach as newer markets have emerged in the deep interiors of the country. Channel inventory for the industry is 20-30% higher than normal, due to tepid demand. Despite tepid performance we remain bullish on the stock led by 1) 15 product introductions in FY17 and FY18 2) renewed focus on efficient marketing and 3) planned launch of ~5-6 new products in FY20. Additionally, its focus on herbicides (32% of sales) and fungicides (15%)...

Gross margins contracted 670bps yoy to 36.6% on inflated RM cost, which the company was unable to pass on due to poor agronomics. This resulted in an EBITDA margin contraction of 603bps yoy to 9.9% (lower than our estimate of 15.1%). (up 30-40% yoy) for the industry. Dhanuka remains at a comfortable position as they have already taken a sales return of Rs490mn in Q3FY19 and Rs1.0bn in 9MFY19. We cut our EPS estimates by 20%/11% for FY19/20E and introduce FY21 estimates while rolling forward our valuations to FY21E. Maintain Buy and reduce our TP to Rs450 (earlier...

We maintain Buy with a TP of Rs 715/sh (22x Sep'20 EPS). Dhanuka Agritech (DAGRI) showed a gradual recovery in 2QFY19 after a weak 1QFY19 performance which was marred by higher input costs and inability to pass on RM inflation. Sales/EBITDA/PAT grew by 10.2/0.9/4.2% to Rs 3.8bn/ Rs 756 mn/Rs 550mn respectively.

We expect PI and Insecticides to post 3-year earnings CAGR of 13.4% and 13.5% over FY18-21E. We like Dhanuka's asset light business model and anticipate a better 2HFY19 performance. We like Dhanuka (TP:-Rs 723/share, upside of 31%) and PI Industries (TP:-Rs 923/share, upside of 19%) in our coverage universe. As Chinese environmental compliances get stricter, low level of RM inventory in the channels and higher RM costs are likely to pose near-term margin challenges for Indian agro-chemical manufacturers. To reduce dependency on China, Indian crop-protection companies are revisiting their sourcing options.

We maintain Buy with a TP of Rs 700/sh (22x Jun'20 EPS). Dhanuka Agritech (DAGRI) reported muted revenue of Rs 2.1bn (up 2.4% YoY) in 1QFY19, owing to lower change in product mix and inability to pass on RM inflation. Higher RM cost resulted in lower gross margins 35.2% (down 993 bps QoQ, and 240 bps YoY). EBITDA (at Rs 159mn) was largely impacted due to higher RM prices.

We maintain NEUTRAL with a TP of Rs 730/sh (22x Dec FY19E EPS). Dhanuka Agritech (DAL) reported muted revenue growth of 4.6% YoY at Rs 2.21bn in 3QFY18, this was largely driven by volume growth. Higher RM costs resulted in lower gross margins at 43.3% (-134bps). EBITDA stood at Rs 353mn was impacted owing to higher employee cost (+13.4% YoY), consequently, EBITDAM declined by 237bps YoY to 15.9%. APAT stood at Rs 286mn (+6.4% YoY).

Dhanuka is India's second largest agro-chemical formulations company in domestic branded sales focusing on speciality molecules from global innovators. It has grown at revenue CAGR of around 11% over FY11-17, following an asset light model of producing formulations only and not technicals, which it sources from global partners. It has 11 tie-ups with global MNCs, which ensure new specialty products in Indian markets. Dhanuka has regularly launches new products, mainly in the fast-growing Herbicide/ Fungicide segments and over the years, it has a strong basket...

We maintain NEUTRAL with a TP of Rs 712/sh (22x FY19E EPS). Dhanuka Agritech (DAL) reported healthy revenue growth of 11.4% YoY at Rs 3.4bn in 2QFY18, owing to new product launches which boosted volume growth. Higher RM costs resulted in lower gross margins at 41.0% (-139bps). EBITDA at Rs 750mn was impacted owing to higher other expenditure and employee cost (+7.1% and 9.6% YoY). APAT stood at Rs 528mn (+5.3% YoY).

Dhanuka reported 2.2% YoY decline in revenue led by volume de-growth of 1.5% YoY (Bayer's domestic revenue down 5-7%; Rallis down ~5%; UPLs up 6%). Management highlighted that volumes have normalized from mid-July.

Gross sales dropped by 2% yoy to Rs2.1bn on the back of destocking ahead of GST implementation but was above our estimate of Rs2bn. Absence of operating leverage and higher RM cost resulted in 250bps yoy contraction in EBITDA margins to 11.8%. EBITDA fell 14% yoy to Rs245mn and was below our estimate of Rs278mn. PAT dropped by 19% yoy Rs161mn and was below our estimate of Rs197mn due to lower other income. Post GST, re-stocking has progressed at a healthy pace across north, central and west India owing to good monsoon and lower channel inventory. However, sales are yet to pick up in South India which has so far received deficient rainfall....

For FY18, the management guided (a) revenue growth of 15% vs. 17.5% earlier, (b) slight moderation in EBITDA margin (vs. 50-100 bps increase guided earlier) on increased investment in dealer network, and (c) 50-75 bps increase in effective tax rate.