Despite largely missing Ebitda and net profit compared to the street's estimate, brokerage firms continue to remain positive on Dhanuka Agritech in the long run. However, they have cut the target prices for the agrochemicals counter, suggesting an upside potential of up to 60 per cent in the stock.
Dhanuka Agritech reported a 21.31 per cent YoY rise in the net profit to Rs 55.04 crore in the quarter ended December 2024 as against Rs 45.37 crore during the previous quarter ended December 2023. Sales rose 10.42 per cent YoY to Rs 445.27 crore in the quarter ended December 2024 with Ebitda rising 18.91 per cent YOY to Rs 82.57 crore in December 2024 quarter.
Brokerage firms tracking the stock continue to remain positive following its acquisition of two brands from German major Bayer, making its product funnel stronger, adding to the potential of strong topline growth. The brokerage firms have slashed their target prices but still reflect a strong upside potential in the counter.
Dhanuka Agritech’s impressive volume growth of 12 per cent and Ebitda margin expansion of 160 bps YoY in Q3 in a tough working environment led to a beat on Ebitda and net profit estimates, said Nuvama Institutional Equities. The company’s product funnel remains strong, now more so, supported by two newly acquired brands from Bayer, it said.
"There seems to be teething issues on scaling up the technical plant, which we believe shall catch up with consequential and imminent registrations from other geographies. Notwithstanding the same, we continue to like Dhanuka’s asset-light business model fuelled by product launches," Nuvama added, reiterating 'buy' with a revised target price of Rs 2,215, suggesting a 60 per cent upside.
Shares of Dhanuka Agritech dropped to Rs 1,384.05 on Wednesday to rebound to Rs 1,424.05 for the day. The total market capitalization of the company stood close to Rs 6,500 crore. However, the stock is down nearly 30 per cent from its 52-week high at Rs 1,926.40 hit in August 2024.
Dhanuka Agritech 3QFY25 results beat estimate. For FY25, management has revised its topline guidance to 14 per cent coupled with 100 bps Ebitda margin expansion on YoY basis. The company expects the volume growth momentum to continue in 4QFY25 and in FY26 led by new product introduction, said Antique Stock Broking.
"We believe ramp-up of the Dahej project and scale-up of exports will put Dhanuka on the next growth trajectory. The acquisition of two products from Bayer provides strong growth visibility in FY27 and beyond. We marginally revise our FY25/ 26/ 27 EPS estimates by -1 per cent/ -6 per cent/ -3 per cent," it added with a 'but' rating and a revised target price of Rs 2,030.
Dhanuka Agritech revised its revenue growth guidance for FY25 from 16 per cent to 14 per cent, while maintaining its margin guidance of an improvement of 100 bps. The management remains optimistic about delivering healthy growth in FY26 and improving EBITDA margins, driven by a favourable product mix and stable/improving prices, said Axis Securities.
"Dhanuka has secured global rights to the active ingredients Iprovalicarb and Triadimenol (invented by Bayer). By FY27, the contribution from these two products to the top line is projected to be in the range of Rs 175-200 crore, with a 10-15 per cent CAGR growth thereafter. It is taking steps to optimise its inventory levels and expects normalisation by the end of the next quarter," Axis added with a 'buy' rating and a target price of Rs 1,780.