Buy Dhanuka Agritech, target price Rs 1000: Emkay Global

Emkay Global has buy call on Dhanuka Agritech with a target price of Rs 1000. The current market price of Dhanuka Agritech is Rs 724. Time period given by analyst is one year when Dhanuka Agritech Ltd. price can reach defined target.

Dhanuka Agritech Ltd., incorporated in the year 1985, is a Small Cap company (having a market cap of Rs 3381.35 Crore) operating in Pesticides/Agro Chemicals sector.

Dhanuka Agritech Ltd. key Products/Revenue Segments include Agrochemicals, Other Operating Revenue, Scrap and Power Generation for the year ending 31-Mar-2021.



Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 330.49 Crore, down -9.10 % from last quarter Total Income of Rs 363.58 Crore and up 16.25 % from last year same quarter Total Income of Rs 284.30 Crore. Company reported net profit after tax of Rs 54.40 Crore in latest quarter.

Investment Rationale
The brokerage believes that Dhanuka’s healthy new product pipeline will keep up growth momentum in the domestic market, while Dahej greenfield capex will help the company to tap the export opportunity. For FY23/FY24, the brokerage has revised revenue estimates by 2.4%/0.8%, EBITDA estimates by 6.9%/2.8% and earnings estimates by 5.6%/1.7%, factoring in new product launches and improving mix. It maintains Buy with an unchanged Mar’23E TP of Rs1,000, implying FY24E P/E of 19x. Key assumptions: 1) 10.75% cost of equity, 2) 10% PAT CAGR in FY25-35E, and 3) terminal growth rate of 5% starting from FY35E.

Promoter/FII Holdings
Promoters held 70.0 per cent stake in the company as of 31-Mar-2022, while FIIs owned 3.67 per cent, DIIs 17.5 per cent.