Dhanuka Agritech Limited Upgraded by CRISIL Equities

Dhanuka Agritech Ltd, India's leading crop protection solutions provider having Rs.540 crores (USD 135 million) gross turnover, has been assigned "4/5" fundamental grade by CRISIL Equities, raising it from the previous from "3/5" grade with a one-year fair value of Rs 109 per share, in its July 11, 2011 report.

The grades indicate that Dhanuka's fundamentals are 'superior' driven by company's consistently robust financial performance. While the domestic pesticide industry grew at 18% CAGR over FY07-10, Dhanuka's revenue grew by 27% CAGR over the same period. The company's return on equity has been more than 35% in the past three fiscals, which is also higher than that of its peers. With the backing of a strong management, the company has been able to maintain its market share in the past four years among bigger competitors. The upbeat prospects of the domestic pesticide industry further support the grade.

Commenting on the occasion, Mr. M K Dhanuka, Managing Director, Dhanuka Agritech said, "We are quite excited about our fundamental grade being upgraded by CRISIL Equities. At Dhanuka, our constant endeavor is consistently achieving significant growth in our financials. We are poised for capacity expansion at our manufacturing capabilities at Sanand (Gujarat) and Udhampur (J&K). With the further expansion of our already extensive distribution network, we are sure to achieve our next milestone of crossing Rs.1,000 crore turnover in the next couple of years. Our esteemed Chairman- Mr. R G Agarwal has given us vision of looking beyond 1000."

For FY11-FY12, Dhanuka Agritech expects 25% growth in topline in comparison to last year's 21%. With current retail and dealer base of almost 70,000 and 30 offices and warehouses across India, Dhanuka is among the top five Companies in India when it comes to branded sales.

CRISIL Equities expects Dhanuka's top line to grow at a two-year CAGR of 17.7% to Rs. 6.7 bn over FY11-13, largely on account of the company's focus on sales of specialty molecules and capacity expansion, which will assist in achieving higher growth than the industry. EBITDA margin and PAT margin in FY13 are projected at 14.8% and 10.0%, respectively, akin to current profitability levels.

The stock closed the day at Rs.98.80, up by Rs.2.80 or 2.92%. The stock hit an intraday high of Rs.98.80 and low of Rs.95.80.

The total traded quantity was 0.87 lakhs compared to 2 week average of 0.74 lakhs.

Source : Equity Bulls

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