Buy Dhanuka Agritech, target price Rs 942: Centrum Broking

Centrum Broking has buy call on Dhanuka Agritech Ltd. with a target price of Rs 942. The current market price of Dhanuka Agritech Ltd. is Rs 727.3.

Dhanuka Agritech Ltd., incorporated in the year 1985, is a Small Cap company (having a market cap of Rs 3387.64 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-2022.



Financials
For the quarter ended 30-09-2022, the company reported a Consolidated Total Income of Rs 548.40 Crore, up 33.89 % from last quarter Total Income of Rs 409.58 Crore and up 23.03 % from last year same quarter Total Income of Rs 445.76 Crore. Company reported net profit after tax of Rs 73.02 Crore in latest quarter.

Investment Rationale
DAGRI’s margins are expected to improve from Q4FY23E post RM cost normalization. New product introductions and ramp-up thereof to also support margins. Enquiries for formulation exports seems an unexplored area which the company can capitalise on post Dahej greenfield project commissioning. Despite the Rs850mn buy-back, the company has significant cash on the books, and is well placed to undertake any new expansion projects. The brokerage remains optimistic on DAGRI’s exports foray and maintain BUY with TP of Rs942, valuing the company at 16.5x 1HFY25E EPS of Rs57.1.

Promoter/FII Holdings
Promoters held 70.0 per cent stake in the company as of 30-Sep-2022, while FIIs owned 3.9 per cent, DIIs 16.65 per cent.