Target: ₹1,372
CMP: ₹1,049.30
Dhanuka Agritech reported weak Q3. Profitability was impacted by negative operating leverage, as topline declined 8 per cent year on year. The company bore the brunt of weak agro-chemical demand environment as excess rainfall and subdued crop prices impacted pesticide consumption.
While the stock has corrected about 45 per cent in the past nine months and valuations at 12.8x FY28E EPS are compelling, earnings outlook depends on the trajectory of monsoon and its impact on agro-chemical consumption. Hence, we revise the stock to Buy from Accumulate. However, we lower our TP to ₹1,372 (₹1,628 earlier), on 17x 9MFY28E EPS of ₹80.7, as we roll forward to 9MFY28E financials.
The company commercialized its second technical molecule from its technical plant at Dahej in Gujarat in Q3FY26. However, revenues remained muted at ₹4 crore, as Q3 is an off-season quarter for both Bifenthrin and Difenoconazole. In addition, Difenoconazole production was delayed into November-December but is now fully operational. The management expects a sharp improvement from Q4FY26, with meaningful revenue contribution beginning in Q4 and 80 per cent capacity utilization targeted for FY27 across Bifenthrin, Difenoconazole and Iprovalicarb.
The MPP-2 plant at Dahej, in final planning stage, is expected to be concluded by FY26-end. The capex for this plant is expected to be ₹6-7 crore.
Dhanuka Agritech has a strong launch pipeline in FY27, with three new products planned. This includes two fungicides under the 9(3) registration route, targeted at key crops such as grapes, potato, tomato and chilli. In addition, it plans to introduce a spray enhancer, primarily catering to the tomato segment.
Published on February 6, 2026