Initiating Coverage on Dhanuka Agritech Ltd - Emkay

Reco: BUY
CMP: Rs 116
Target Price: Rs 150

Successful business model at attractive valuations

- Unique business model with lower investments in assets and larger focus on marketing & distribution makes it a preferred choice for MNCs to partner with to enter into Indian markets

- Various tie-ups with leading global ag-chem companies (5 in Japan and 3 in US) and a strong product pipeline (3-4 products every year) ensures sustainable revenue growth.

- Dhanuka's profit margins are 2nd highest in the industry (after Rallis) while asset light business model results into RoE (26%) higher then the industry average by 300-400bps.

- With 15% earnings CAGR along with one of the highest profit margins and return ratios, we believe that at current discount of ~30% to industry P/E, Dhanuka offers attractive upside. Initiate with BUY with price target of Rs 150.

Source : Equity Bulls

Keywords