Buy Dhanuka Agritech; target of Rs 1150: Anand Rathi

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Dhanuka Agritech reported a resilient performance in 2QFY27, driven by healthy growth in insecticides, PGRs, and nutritional products.
  • The company's gross margin fell due to higher raw material costs, but EBITDA margin rose due to favorable product mix, higher royalty income, and tight cost control.
  • Innovation and new product launches, such as Polin and Dhanzyme Gold Liquid, are expected to drive growth.
  • The management expects FY27 revenue to grow in low single digits with a ~125bps decline in EBITDA margin.

Thesis Validation Checklist

  • Investors should watch for signs of improving demand and pricing power in the agrochemical sector.
  • The company's ability to maintain its product mix and control costs will be crucial in navigating the challenging operating environment.
  • Progress on new product launches and the ramp-up of the Dahej plant will be important indicators of the company's growth potential.
  • Adverse weather conditions, volatility in commodity prices, and delays in ramping up the Dahej plant are key risks to the thesis.