Dhanuka Agritech Research Report By Edelweiss

We recently met Dhanuka Agritech’s (DAL) management to get a sense of the domestic agrochemical industry and the company’s future business prospects. Management highlighted that deficient monsoon, correction in agro commodity prices and higher agrochemical channel inventory have impacted both industry and company growth during FY15. The recent unseasonal rains have further worsened the situation. However, DAL continues to be upbeat on its long‐term growth prospects, riding its innovative products’ pipeline. The company is confident of growing revenues at 20‐25% CAGR over next 2‐3 years on 2‐3 innovative product launches per annum considering normal weather condition. It also expects to scale up EBITDA margin to 20% from current 17% over the period. We believe a vibrant distribution network, tie ups with innovators, launch of new products and Rajasthan capex will propel DAL’s growth going ahead. We maintain ‘BUY’.

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