Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Dhanuka Agritech Ltd
Going strong
Fundamental Grade 3/5 (Good fundamentals)
Valuation Grade 4/5 (CMP has upside)
Industry Chemicals
Dhanuka Agritech Ltd’s (Dhanuka’s) Q3FY11 revenues and operating
profitability were in line with CRISIL Equities’ expectations with an expected qo-
q drop in sales at the end of the kharif cropping season. The growth in
bottom line has been higher than expected due to lower tax outlay and rise in
other income. We have consequently raised our PAT estimates for FY11-FY13.
This and the rolling forward of earnings estimates by a year have led us to
raise our fair value to Rs 87 from Rs 79. We retain the fundamental grade of
‘3/5’ due to Dhanuka’s earnings stability and expectations of continued strong
performance.
Q3FY11 result analysis
• Dhanuka’s revenues increased by 17.7% (y-o-y) to Rs 1,131 mn driven by
higher volume offtake.
• EBITDA margin improved both sequentially as well as y-o-y due to higher
sales of specialty molecules, a trend which is likely to continue in Q4FY11.
Specialty chemicals comprised ~60% of the company’s sales in Q3FY11
and recorded a 30% y-o-y growth. Consequently, margins improved y-o-y
to 15.6% from 14.8%, despite higher freight costs and higher expenditure
on sales and advertising
• Production from the company’s Udhampur plant (which comprises ~20% of
the total production) is exempt from tax. This led to an additional income
of Rs 17 mn due to refund of excise duty for the plant. This along with a
lower tax outlay caused PAT to grow 46.4% y-o-y to Rs 124 mn.
Key developments
• The company is proceeding cautiously on the pilot project of self-owned
retail outlets and the venture is still at the market-testing phase
• Expansion of the Sanand facility is on track (Rs 200 mn capex); scheduled
to be commissioned by December 2011.
Valuations: Current market price has an upside
We continue to value Dhanuka based on the discounted cash flow method. We
revise our fair value to Rs 87 per share, which translates into a valuation grade
of ‘4/5’.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Dhanuka Agritech Ltd
Going strong
Fundamental Grade 3/5 (Good fundamentals)
Valuation Grade 4/5 (CMP has upside)
Industry Chemicals
Dhanuka Agritech Ltd’s (Dhanuka’s) Q3FY11 revenues and operating
profitability were in line with CRISIL Equities’ expectations with an expected qo-
q drop in sales at the end of the kharif cropping season. The growth in
bottom line has been higher than expected due to lower tax outlay and rise in
other income. We have consequently raised our PAT estimates for FY11-FY13.
This and the rolling forward of earnings estimates by a year have led us to
raise our fair value to Rs 87 from Rs 79. We retain the fundamental grade of
‘3/5’ due to Dhanuka’s earnings stability and expectations of continued strong
performance.
Q3FY11 result analysis
• Dhanuka’s revenues increased by 17.7% (y-o-y) to Rs 1,131 mn driven by
higher volume offtake.
• EBITDA margin improved both sequentially as well as y-o-y due to higher
sales of specialty molecules, a trend which is likely to continue in Q4FY11.
Specialty chemicals comprised ~60% of the company’s sales in Q3FY11
and recorded a 30% y-o-y growth. Consequently, margins improved y-o-y
to 15.6% from 14.8%, despite higher freight costs and higher expenditure
on sales and advertising
• Production from the company’s Udhampur plant (which comprises ~20% of
the total production) is exempt from tax. This led to an additional income
of Rs 17 mn due to refund of excise duty for the plant. This along with a
lower tax outlay caused PAT to grow 46.4% y-o-y to Rs 124 mn.
Key developments
• The company is proceeding cautiously on the pilot project of self-owned
retail outlets and the venture is still at the market-testing phase
• Expansion of the Sanand facility is on track (Rs 200 mn capex); scheduled
to be commissioned by December 2011.
Valuations: Current market price has an upside
We continue to value Dhanuka based on the discounted cash flow method. We
revise our fair value to Rs 87 per share, which translates into a valuation grade
of ‘4/5’.
No comments:
Post a Comment