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Buy This Agrochemical Stock For Sharp Upside, Rs. 850 Target Price, Rs. 3bn Capex Program Guided:Top Brokerage
Top brokerage firm Prabhudas Lilladher suggests investors to buy the stocks of Dhanuka Agritech. The company has reported a revenue growth of 8% YoY to Rs. 3.9bn completely driven by prices as volumes remained flat YoY during 1QFY23. Dhanuka Agritech's Capex program of Rs. 3bn for setting up of formulation and technical units at Dahej is well on track; likely to be commissioned by 4QFY23.
Stock To Buy: Target Price & Financial Result
The Current Market Price (CMP) of Dhanuka Agritech is Rs. 695. Prabhudas Lilladher has estimated a Target Price for the stock at Rs. 850. This stock has the potential to give 22.30% return, in the upcoming 1 year. This is a small-cap stock with a market capitalization of around Rs. 3,223 crore.
| Stock Outlook | |
|---|---|
| Current Market Price (CMP) | Rs. 695 |
| Target Price | Rs. 850 |
| Potential 1 year return | 22.30% |
| 52 week high share price | Rs. 955.00 |
| 52 week low share price | Rs. 662.75 |
Dhanuka Agritech (DAGRI) reported a decent set of numbers amid a challenging domestic scenario led by delayed monsoons and inflationary RM scenario during 1QFY23. It has reported EBITDA/PAT growth of -16%/1% YoY during 1QFY23.
Prabhudas Lilladher: Why Should You Buy This Stock?
The company's inflated RM scenario and its inability to fully pass on prices resulted into lower margins; ITI for 1QFY23 stood at 18% as against 10% in FY22; remains confident to improve going forward led by new product launches; to launch 3 new 9(3) and 9(4) molecules each in 1HFY23.
"Going forward, citing the positive demand outlook in the domestic market led by pick-up in rainfall activities; remunerative crop prices and lower 1H base of FY22, the company remains confident of achieving double digit YoY revenue growth in FY23E with margins to be maintained at FY22 levels. We broadly maintain our FY23/24 EPS and expect DAGRI to clock Revenue/PAT CAGR of 12%/13% each over FY22-FY24E. Going forward, Dhanuka Agritech remains optimistic on the remaining half of the season citing better rainfall leading to higher liquidation of inventories and remains hopeful to achieve double digit revenue growth in FY23E," commenting about the stock, Prabhudas Lilladher said.
Company portfolio:
Dhanuka Agritech Ltd. is one of India's leading agrochemical company, and they have 3 manufacturing facilities in Rajasthan, Gujarat and J&K with well-equipped Quality Testing Facilities. They also have 39 warehouses and network of over 8 branch offices across the Indian geography caters to 6,500 distributors & approximately 75,000 dealers. Dhanuka Agritech has recently received registrations for 3 new 9(3) molecules which are expected to be launched in 1HFY23. Management expects revenue potential of Rs. 500mn over the next 3-4 years. Additionally, the company intends to launch 3 new 9(4) molecules in 2QFY23 namely Craze-X (Pretilachlor), Fuzi Super (Bisparibac Sodium). While the have launched one 9(4) product Terminal (Glufosinate Ammonium) in 1QFY23.
Disclaimer
The above stock was picked from the brokerage report of Prabhudas Lilladher. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.
