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Results above expectations
Dhanuka Agritech reported results better than our expectations on operational front. Revenues at Rs 129.9 cr came in-line with expectations of Rs 129.2 cr, registering a growth of 1.5% yoy
EBITDA margins improved to 17.5% (up 600 bps qoq and 140 bps yoy) due to price hike taken by the company during the quarter, better product mix, and cost containment measures incorporated by the company. However, company has got Rs 2.5 cr excise duty refund during the quarter on its Udhampur plant. This benefit is expected to continue in FY13 also.
Management expects FY13 to be better year than FY12 and expects 20% growth in FY13 (led by 10% normal business growth, 5% from price hikes and 5% from new product launches scheduled) as against 8% in FY12 with stable margins.
Key Highlights
The company has lined up robust pipeline of products to be launched in 1HFY13. It expects to launch three co-marketed products in June with total revenue potential of Rs 25 cr in FY13. It also plans to launch two more products by July in Plant Growth Nutrient space with revenue potential of Rs 5 cr.
FY12 saw increase in realizations rates for Soyabean which has led to higher acreages for the crop. Dhanuka’s main product Targa Super (contributes around 20% of revenues) is a big product in Soyabean crop. Management expects that the full benefit of increased acreages would be visible in FY13.
Valuation & Recommendation
We have positive outlook for the company and believe that it looks promising with factors like the low per-capita consumption of pesticides in India, which provides opportunities for growth, increased demand for food grains and the rising awareness about pesticide usage among the farming community.
At CMP the stock trades at 6.5x FY13E and 5.5x FY14E. We believe the stock is available at attractive valuations. Based on our EPS of Rs 13.9 for FY13E, target price comes to Rs 118, potential upside of 30% from current levels. We maintain our BUY rating on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Results above expectations
Dhanuka Agritech reported results better than our expectations on operational front. Revenues at Rs 129.9 cr came in-line with expectations of Rs 129.2 cr, registering a growth of 1.5% yoy
EBITDA margins improved to 17.5% (up 600 bps qoq and 140 bps yoy) due to price hike taken by the company during the quarter, better product mix, and cost containment measures incorporated by the company. However, company has got Rs 2.5 cr excise duty refund during the quarter on its Udhampur plant. This benefit is expected to continue in FY13 also.
Management expects FY13 to be better year than FY12 and expects 20% growth in FY13 (led by 10% normal business growth, 5% from price hikes and 5% from new product launches scheduled) as against 8% in FY12 with stable margins.
Key Highlights
The company has lined up robust pipeline of products to be launched in 1HFY13. It expects to launch three co-marketed products in June with total revenue potential of Rs 25 cr in FY13. It also plans to launch two more products by July in Plant Growth Nutrient space with revenue potential of Rs 5 cr.
FY12 saw increase in realizations rates for Soyabean which has led to higher acreages for the crop. Dhanuka’s main product Targa Super (contributes around 20% of revenues) is a big product in Soyabean crop. Management expects that the full benefit of increased acreages would be visible in FY13.
Valuation & Recommendation
We have positive outlook for the company and believe that it looks promising with factors like the low per-capita consumption of pesticides in India, which provides opportunities for growth, increased demand for food grains and the rising awareness about pesticide usage among the farming community.
At CMP the stock trades at 6.5x FY13E and 5.5x FY14E. We believe the stock is available at attractive valuations. Based on our EPS of Rs 13.9 for FY13E, target price comes to Rs 118, potential upside of 30% from current levels. We maintain our BUY rating on the stock.
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