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The company reported good set of results
Seasonally best quarter in terms of sales: Dhanuka Agritech
reported sales of Rs 191.2 crs, registering a growth of 15.2%
yoy and 103% qoq. Due to erratic rains the sales was lower
than the expectations. The company is expecting higher
growth in Q3 however also believes that Q3FY12 will also have
some spillover effect of this irregular rains. (June and July
being the long dry months and August and Sept received
above average rains)
Seasonally weak quarter in terms of margins: Q2 is
seasonally weak quarter for the company in terms of margins
as material cost increases during the quarter. The company
reported EBITDA margins of 13.3% during the quarter as
compared to 16.2% in Q1FY12. However, there was an
improvement as compared to Q2FY11 where margins were
12.7%. EBITDA margins are expected to come back to normal
levels of around 14.5%-15.0% from Q3 onwards. For the full
year FY12E Dhanuka is expected to report EBITDA margins of
14.7%
Key highlights of the quarter
• Despite lower margins on sequential basis, PAT margins
were higher at 11% as compared to Q1FY12 of 10.7% due
to lower tax. The company has changed product mix at
its Uddampur facility (which is under 100% tax benefit
currently) in addition with usage of surcharge tax
resulted in lower tax rate during the quarter
• The company launched four new products during the
quarter with association with various MNCs.
• Dhanuka is in process of acquiring 25% stake in a Seed
Company and is expected to complete the process
during FY12.
Valuation & Recommendations
We still believe the outlook for the company looks promising
with factors like the low per-capita consumption of
pesticides, which provides opportunities for growth, increased
demand for food grains and the rising awareness about
pesticide usage among the farming community.
Based on our EPS of Rs. 12.7 for FY12E and a target multiple
of 11x we arrive at target price of Rs. 140 potential upside
of 38% from current levels.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
The company reported good set of results
Seasonally best quarter in terms of sales: Dhanuka Agritech
reported sales of Rs 191.2 crs, registering a growth of 15.2%
yoy and 103% qoq. Due to erratic rains the sales was lower
than the expectations. The company is expecting higher
growth in Q3 however also believes that Q3FY12 will also have
some spillover effect of this irregular rains. (June and July
being the long dry months and August and Sept received
above average rains)
Seasonally weak quarter in terms of margins: Q2 is
seasonally weak quarter for the company in terms of margins
as material cost increases during the quarter. The company
reported EBITDA margins of 13.3% during the quarter as
compared to 16.2% in Q1FY12. However, there was an
improvement as compared to Q2FY11 where margins were
12.7%. EBITDA margins are expected to come back to normal
levels of around 14.5%-15.0% from Q3 onwards. For the full
year FY12E Dhanuka is expected to report EBITDA margins of
14.7%
Key highlights of the quarter
• Despite lower margins on sequential basis, PAT margins
were higher at 11% as compared to Q1FY12 of 10.7% due
to lower tax. The company has changed product mix at
its Uddampur facility (which is under 100% tax benefit
currently) in addition with usage of surcharge tax
resulted in lower tax rate during the quarter
• The company launched four new products during the
quarter with association with various MNCs.
• Dhanuka is in process of acquiring 25% stake in a Seed
Company and is expected to complete the process
during FY12.
Valuation & Recommendations
We still believe the outlook for the company looks promising
with factors like the low per-capita consumption of
pesticides, which provides opportunities for growth, increased
demand for food grains and the rising awareness about
pesticide usage among the farming community.
Based on our EPS of Rs. 12.7 for FY12E and a target multiple
of 11x we arrive at target price of Rs. 140 potential upside
of 38% from current levels.
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