Buy Dhanuka Agritech, target price Rs 1,760: Axis Securities

Axis Securities has a buy call on Dhanuka Agritech with a target price of Rs 1,760. The current market price of Dhanuka Agritech is Rs 1,571.9. Dhanuka Agritech, incorporated in 1985, is a Small Cap company with a market cap of Rs 7061.74 crore, operating in Pesticides/Agro Chemicals sector.

Dhanuka Agritech's key products/revenue segments include Agrochemicals, Other Operating Revenue, Scrap and Power Generation for the year ending 31-Mar-2024.

Financials

For the quarter ended 30-09-2024, the company has reported a Consolidated Total Income of Rs 665.08 crore, up 32.83% from last quarter's Total Income of Rs 500.71 crore and up 6.64% from last year same quarter Total Income of Rs 623.67 crore. The company has reported net profit after tax of Rs 117.52 crore in the latest quarter.

Investment Rationale
Dhanuka Agritech revised its revenue growth guidance for FY25 from 18-20% to 16%. However, on the upside, it has revised its margin guidance, projecting a 200bps improvement over the previous guidance. The management remains optimistic about delivering healthy growth in FY25 and improving EBITDA margins, driven by a favourable product mix, stable/improving prices, and a strong Rabi season. Additionally, Dhanuka is taking steps to optimize its inventory levels and expects normalization by the end of the next quarter. Axis Securities recommends a BUY rating on the stock with a target price of Rs 1,760/share, implying an upside of 10% from the current market price.

Promoter/FII Holdings
Promoters held 70.29 per cent stake in the company as of 30-Sep-2024, while FIIs owned 2.01 per cent, DIIs 19.03 per cent.